A perfect storm of challenges calls for decisive action at this year’s Davos summit. Mounting geopolitical tensions, soaring global temperatures and increasing economic instability all feature as pressing concerns in the 2025 World Economic Forum’s Global Risks Report – a research paper that checks the annual pulse of the driving forces shaping our world and sets the stage for discussions at Davos.

President Trump’s first week in office has already moved the world’s largest economy away from supporting measures to align global finance with net zero, including withdrawing the US from the Paris Climate Agreement, signing the paperwork live on stage during his inaugural parade and rally.

“The legislative response to climate change is splintering,” says Andy Garraway, Head of Climate Policy. “On one hand in Europe and like-minded jurisdictions, 2025 looks to be dominated by implementation of existing and new regulations, with some streamlining of overlapping reporting requirements on the cards.

“On the other hand, Trump’s immediate actions, upon taking office, point to a focused campaign to unpick the hard-won climate gains of the Biden administration in the US, leading to uncertainty for businesses that must navigate a dangerously unstable policy environment.”

Despite Trump shifting the mood, climate and nature remain firmly on the risk agenda. This year’s Global Risks Report ranks extreme weather events in second place as an immediate concern – think next two years – beneath misinformation and disinformation, while the top-four risks on the ten-year horizon relate to climate and nature.

Global organisations are already feeling the impact of our changing climate and the expectation is for climate-and-nature-related disruptions to business to rise along with the associated costs to bottom lines.

“Climate change is significantly elevating supply-chain risks for businesses. A recent study published in Nature projects that disruptions from climate-induced events could lead to net economic losses of up to $25 trillion by mid-century,” says Dr Scott Kelly, SVP Model Development and Analytics.

“The World Economic Forum’s Global Risks Report 2025 further emphasises that extreme weather events are among the most pressing threats in the coming decade. These findings highlight the urgent need for companies to integrate climate resilience into their supply-chain strategies to mitigate escalating costs and ensure operational continuity.”

Among other environmental risks, biodiversity loss and ecosystem collapse mark one of the largest increases in ranking among all risks, moving from #37 in 2009 to #2 in 2025. Mary Goldman, Director of Environmental Risk Analytics, warns business organisations against ignoring these pressing risks: “The rising prominence of biodiversity loss, ecosystem collapse and critical changes to Earth systems in global risk rankings reflects the urgent reality we face as global temperatures exceed 1.5°C of warming. These issues highlight the interdependence of nature and climate and the need for integrated solutions.

This interdependence between biodiversity loss and the climate crisis means that businesses need solutions that tackle climate and nature together.

“Simply put, economic value cannot be sustained on a planet incompatible with basic societal and ecological stability. Organisations that ignore these risks perpetuate trends incompatible with a sustainable future and miss opportunities to drive value through proactive, nature-positive leadership.

“Climate and nature are inseparable. Without a holistic approach, businesses may face significant challenges in adapting to a future shaped by competing demands for essential resources and sustainable infrastructure.”