The billion-dollar business strategy of the future.

As geopolitical tensions escalate and economic uncertainty grips global markets, the role of environmental action in business strategy has evolved from an ethical consideration to a driver of resilience, capital allocation, and long-term competitiveness. The latest findings from the CDP Corporate Health Check 2026 reveal a compelling truth: companies that prioritise environmental leadership aren’t just protecting the planet – they’re securing their financial futures. The study, conducted in partnership with Oliver Wyman, highlights how a select group of global companies is seizing the opportunity presented by environmental responsibility, unlocking a staggering US$218bn in financial value in just the past year. These leaders are cutting emissions at four times the rate of their peers, proving that the link between sustainability and profitability is no longer a theoretical ideal but a hard reality for businesses who understand the power of environmental stewardship.

A New Wave of Environmental Leadership
The findings from CDP’s 2026 analysis indicate that just 15% of companies worldwide are now embracing environmental action as a core business strategy. This cohort is leading the charge on climate, water, and forest issues, setting an ambitious pace that is, in many cases, outpacing traditional financial metrics. Companies in this group reduced their emissions at an average compound annual growth rate (CAGR) of 4%, compared to only 1% among those in the lower-performing category. This is a staggering difference in progress – one that speaks volumes about the long-term viability of aligning corporate performance with the planet’s wellbeing.

Sherry Madera, CEO of CDP, aptly puts it: “Climate and nature loss are no longer distant risks – they are already reshaping markets, supply chains, and investment decisions.” This shift is more than a trend. It’s a transformation in how companies are thinking about their bottom line. As the study suggests, the competitive advantage now lies with those who have integrated climate, water, and forest considerations into their core strategies, using them as levers to not only reduce risks but also drive financial opportunity.

The Rising Economic Case for Sustainability
The report is clear: there is undeniable economic value in environmental action. Sectors such as financial services, infrastructure, and apparel have seen stronger market capitalisation growth among environmental leaders compared to their less proactive peers. For example, financial services companies that lead on sustainability have outperformed their competitors by 30% in market growth since 2022. In the infrastructure sector, the difference stands at 19% versus 17%, and in apparel, the environmental leaders have grown 16% while others have barely moved the needle at 2%.

This underscores a pivotal point: environmental performance is no longer an ancillary factor in a company’s success. It is central to its financial outcomes. Sustainability isn’t a cost to be managed but an investment that pays dividends in the form of market share, stronger brand reputation, and resilience to shocks. This shift in perspective is reshaping entire industries and forcing a rethinking of how businesses engage with environmental data.

Regional Divergence: A Tale of Two Markets
While environmental leadership is growing, the pace of progress varies significantly across regions. In particular, Japan stands out as the clear global leader, with 22% of Japanese companies achieving leadership status on climate action. This contrasts sharply with the United States, where only 5% of companies are meeting top-tier environmental standards.

Europe continues to perform strongly, with 52% of companies in the EU27 reaching the top two performance levels in environmental metrics, compared to just 31% in the US. However, the study also highlights the growing momentum in China and Southeast Asia, where companies are beginning to catch up rapidly. In fact, China has now surpassed the US in terms of environmental leadership, with 54% of Chinese companies reporting strong performance across climate, water, and forests.

The findings suggest a clear need for regional collaboration and innovation if the global business community is to bridge the environmental divide. As Nick Studer, CEO of Oliver Wyman, notes, “Momentum for the transition is undeniable, yet businesses face a level of political and macroeconomic uncertainty not seen in a generation.” In such a volatile environment, businesses that remain firmly committed to environmental goals are showing that resilience and foresight are just as important as short-term profit margins.

What Next?
While mitigation efforts – reducing emissions and protecting ecosystems – are the focus of most companies at present, adaptation is quickly emerging as the next frontier of environmental action. According to the report, businesses have identified US$1.47tn in physical environmental risks, with more than a quarter of those risks materialising in the near term. Despite this, only US$84.5bn has been invested in adaptation efforts, underscoring the significant opportunity that still exists for businesses to safeguard their operations against the physical impacts of climate change. Companies that invest in climate adaptation are better positioned to protect their value in the face of extreme weather, resource scarcity, and shifting regulatory environments. The report suggests that those who fail to act may find themselves exposed to greater financial instability, making proactive resilience strategies not just a moral imperative, but a financial one as well.

Incentivising Environmental Leadership
One of the most significant findings of the report is the role of governance in driving environmental performance. The most successful companies are linking executive pay directly to environmental outcomes, with 78% of water and forest leaders aligning compensation with sustainability targets. This ensures that environmental objectives are integrated into the very fabric of corporate decision-making, creating an intrinsic motivation for leaders to push the boundaries of what’s possible in terms of emissions reductions and resource management.

Moreover, the research shows that companies with clear transition plans aligned to 1.5°C targets are not only reducing their environmental footprint but also creating a blueprint for other businesses to follow. By adopting robust environmental strategies that consider both the risks and opportunities of climate change, these companies are securing long-term profitability in an increasingly complex global market.

The Future of Environmental Business Strategy
The key takeaway from the CDP Corporate Health Check 2026 is that environmental action is no longer peripheral to business strategy; it is now a core driver of competitiveness and financial performance. As Sherry Madera so aptly puts it, “Earth-positive is no longer peripheral to business strategy; it is becoming a core driver of long-term competitiveness.” Companies that integrate sustainability into their DNA -whether through emissions reductions, value-chain engagement, or adaptation investments -are positioning themselves not just for survival, but for success in the new green economy.

As we look to the future, the challenge is not just for businesses to act on these insights, but for them to scale their efforts. As the global economy continues to face unpredictable headwinds, the companies that thrive will be those that recognize environmental leadership as an opportunity to build resilience, drive growth, and create lasting value for both shareholders and society. It is no longer about doing less harm -it is about doing more good. Environmental action is now more than just a risk management strategy; it is a competitive edge that defines the next generation of corporate leadership.