The Cost of Doing Nothing: Why Climate Resilience is the Next Competitive Advantage

Climate resilience is often discussed in terms of how much it will cost us to adapt. But perhaps we need to ask a different question: how much are we already paying because we have not adapted?

In Malaysia, heavy rainfall alone is estimated to have resulted in some US$7 billion in lost economic output between 2015 and 2024, according to the World Bank’s 2026 Country Climate and Development Report. But the costs are not only economic. Malaysia’s Ministry of Health recorded 73 heat-related illness cases and four deaths nationwide between January and July 2026.

We are already seeing climate risks change the way cities and economies function. Flooding disrupts businesses, transport and supply chains. Extreme heat affects health, workforce productivity and energy demand. Drought can affect water and food security, while sea-level rise presents longer-term risks to infrastructure, property and investment. These risks are interconnected. Disruption in one system can quickly flow into another, creating wider economic consequences.

For businesses, this matters because no company operates in isolation. A company can protect its operations through backup power, remote-work plans or diversified suppliers, but that protection only stretches so far. What happens when employees cannot get to work because roads are flooded, extreme heat affects workforce health and productivity, utilities are disrupted or suppliers cannot deliver?

A business’s ability to withstand climate shocks and stresses ultimately depends on the resilience of the city and the wider systems it relies on.

We see this through our work with cities. Under the Penang Nature-Based Climate Adaptation Programme (PNBCAP), climate risk and vulnerability assessments are being combined with nature-based solutions, public health, community preparedness and institutional capacity. The intention is to connect climate science with planning and implementation. Climate risks cut across urban planning, infrastructure, public health and communities, yet these areas are often still addressed separately. Our work in Kuala Kangsar, Batu Pahat, Yong Peng and Shah Alam reinforces another lesson: every city has different risks and needs, requiring place-based and practical responses.

But resilience is about more than avoiding losses. Investment in resilient infrastructure, nature-based solutions, passive cooling, water management and climate-responsive buildings can create value today through healthier communities, fewer business disruptions, more liveable places and new economic opportunities. The return on resilience is not only the losses avoided during a disaster, but the everyday value created in its absence.

The business case is becoming clearer. Recent Oliver Wyman Forum analysis of 1,500 cities, featured by the World Economic Forum, identifies climate resilience as an emerging driver of economic competitiveness and attractiveness to business.

This also changes the conversation in the boardroom. Climate resilience is no longer only an ESG or operational issue; it is about risk oversight, capital allocation and long-term value. When boards approve major investments or long-lived assets, climate exposure and the adaptive capacity of the surrounding city should increasingly form part of the decision. This means asking management how climate risk is being integrated into strategy and business continuity.

For investments expected to last 20 or 30 years, a question worth asking is whether we are assessing them against today’s climate or the conditions they will face over their lifetime.

Resilience should not be a cost for governments alone to carry. Public funding will remain important, particularly where adaptation protects communities and public infrastructure, but the scale of financing required means we also need to mobilise private capital. Blended finance and public-private partnerships can help unlock capital where risks, returns and public benefits are appropriately shared.