I've been reading CDP's latest research on what it calls the "disclosure dividend" - the return companies get from understanding and acting on their environmental risks.

The numbers are staggering, but what stands out is how this translates into business disruptions and headaches.

Cocoa prices have hit record highs because of extreme weather in West Africa. Semiconductor plants in Taiwan have shut down due to droughts. Insurance premiums in the U.S. have doubled since 2017 because of climate-related disasters.

These aren't future scenarios. They're happening now, and they're hitting company bottom lines directly.

# The Risk Reality Check

According to CDP's findings, 67% of corporates and SMEs identified environmental risks with substantive financial effects.

The companies surveyed identified policy changes as their biggest perceived risk, followed by acute physical risks like flooding and droughts, then chronic risks like rising sea levels and declining water quality. These risks span everything from carbon pricing changes to supply chain disruptions and shifting consumer demands.

90% of large companies have put processes in place for identifying environmental risks, or plan to within two years, but what about SMEs?

# The Business Case for SMEs is Getting Stronger

If you're running a growing SME, the shift towards environmental disclosure and action isn't something only large corporations should be thinking about. Regulatory pressure is increasing, procurement requirements are getting stricter, and investors are asking harder questions about environmental risk.

But fear not. You don't need to solve every environmental challenge at once.

Start with visibility into what's already happening in your business and supply chain. The companies getting this right are taking a systematic approach: identifying their most critical suppliers and understanding their environmental risks, and measuring their own environmental impact consistently rather than trying to estimate it when someone asks.

They're creating financial incentives for suppliers to improve their environmental performance. They're using environmental disclosure as a competitive advantage in procurement processes.
Most importantly, they're taking environmental data seriously. They're not seeing sustainability as a separate initiative - they're integrating it into core business operations and decision-making.

# The Disclosure Dividend in Practice

CDP calls this the "disclosure dividend" - the return companies get from understanding and acting on their environmental impact. Companies that start measuring and disclosing their impact early are better positioned to:

• Access capital from investors who prioritise environmental performance
• Win contracts from procurement teams with strict ESG requirements
• Build resilience against supply chain disruptions
• Identify new revenue opportunities in the green economy

The dividend compounds over time. Each year of consistent environmental data gives you better insights into your business, stronger relationships with stakeholders, and more options for strategic decision-making.

Starting Your Journey

The SMEs starting this journey now aren't just protecting themselves from future risks. They're positioning themselves to benefit from the opportunities that come with early action.

You don't need an expert sustainability team or a huge budget to start. But you do need clear visibility into your current performance and practical systems for improvement.

If you're ready to start building environmental resilience into your business operations, we'd love to help.

FuturePlus helps SMEs measure, manage, improve and report their ESG performance without the complexity or cost of traditional consultancy. Get in touch to find out how we can support your business today.