The food and beverage sector has never been more committed to climate action, yet never more vulnerable to climate risk. The sector has committed to net-zero, established sustainability governance, and begun tracking emissions across value chains.
But when finance committees review capital requests, when procurement teams negotiate contracts, and when performance reviews determine compensation, climate considerations routinely lose out to traditional financial metrics.
The result is a dangerous gap between strategic intent and operational reality – one that exposes balance sheets to preventable losses.
New research commissioned by Risilience reveals a troubling paradox across the heart of the food and beverage sector. The Climate and Nature Risk Report 2025, which examined how the world’s largest organisations are responding to climate and nature risk, found that while 93% of food and beverage companies have integrated climate considerations into their Enterprise Risk Management frameworks, fewer than half (44%) link climate targets directly to financial performance indicators. This shows intent is there, but follow-through is lacking.
The findings arrive at a critical period for the industry. Food and beverage firms face mounting pressure from regulators, investors, as well as escalating impacts from the physical effects of climate change. Some 96% of companies report heightened uncertainty from geopolitical and economic conditions, yet 79% struggle to communicate the long-term financial value of resilience investments in terms that satisfy investors and boards.
The increasing uncertainty and risks acknowledged by the industry are not being translated into risk mitigation strategies. The gap between strategic awareness and operational discipline therefore threatens enterprise value in a sector confronting unprecedented challenges on multiple fronts.
The issue is not commitment. Food and beverage firms have appointed sustainability officers, set net-zero targets, and allocated billions in capital expenditure toward decarbonisation. Approximately 37% of all CapEx across the sector now aligns with sustainability goals.
The problem lies in execution.
Companies treat climate as a strategic priority in boardroom discussions but struggle to embed it in the financial systems, cross-functional processes, and accountability structures that govern day-to-day decision-making. Three barriers stand between aspiration and integration:
- Financial systems that do not integrate climate metrics.
- Measurement frameworks that fail to satisfy C-Suite expectations.
- Organisational siloes that prevent coherent action.
Crossing the integration gap
Legacy financial infrastructure was never designed to handle non-financial risk. Balance sheets, P&L statements, and quarterly forecasts operate on historical data and established accounting conventions.
Climate risk, by contrast, requires forward-looking scenario analysis, probabilistic modelling, and metrics that span decades rather than quarters.
When sustainability teams present emissions reductions or resilience investments, finance departments lack the tools to translate these into discounted cash flows, cost-of-capital adjustments, or ROI calculations that boards are looking for.
The result is a translation problem. Some 27% of food and beverage companies cite integration challenges with existing financial systems as the primary barrier to embedding climate into decision-making, while 25% point to insufficient collaboration between sustainability and finance teams.
These are symptoms of a deeper structural issue. Sustainability operates in one language (tonnes of CO2, science-based targets, biodiversity metrics), while finance operates in another (EBITDA margins, investment costs and return periods). Without a shared analytical framework, the two functions remain parallel rather than integrated.
Overcoming measurement challenges
Quantifying the ROI of sustainability investments remains elusive for most companies. While 86% of food and beverage firms claim they know their decarbonisation ROI, only 18% have developed finance-grade models to back that claim. A further 29% rely on qualitative assessments, which rarely withstand scrutiny when competing for capital against projects with hard financial projections.
This measurement gap undermines credibility. CFOs and boards make allocation decisions based on data they trust, and qualitative narratives about long-term resilience do not compete effectively with quantified payback periods and IRR calculations.
The barriers are well documented. Some 23% of companies cite a lack of internal expertise in climate science or risk modelling. Finance teams do not have the training to model physical climate risks such as flood exposure or heat stress impacts on supply chains. Sustainability teams will often lack the financial modelling skills to translate emissions reductions into enterprise value metrics.
The gap is compounded by data limitations. Scope 3 emissions, which account for the majority of a food company’s carbon footprint, require supply-chain data that many firms do not collect at a level granular enough to make informed investments. Without reliable data inputs, even sophisticated models produce unreliable outputs.
Measurement becomes credible when it is audit-ready, comparable, and linked to financial outcomes. Regulation is accelerating this shift. The International Sustainability Standards Board (ISSB) and the Corporate Sustainability Reporting Directive (CSRD) now require companies to disclose climate-related financial risks in standardised formats.
Compliance creates pressure to build better data infrastructure, but it also creates an opportunity. Companies that invest in finance-grade climate analytics can turn regulatory requirements into strategic advantage, using the same data to inform capital allocation, M&A due diligence, and product innovation.
Breaking down the siloes
Organisational fragmentation may be the most stubborn barrier. Some 33% of food and beverage firms report inconsistent frameworks across business units, with procurement, operations, and strategy teams working from different assumptions about climate risk.
Climate adaptation investments illustrate the problem. Operation teams need to invest in physical resilience measures such as backup water systems, renewable energy infrastructure, or supply chain diversification to protect against climate disruptions. Yet capital allocation committees prioritise projects with clear payback periods and measurable ROI, often measured in quarters rather than years.
Climate adaptation investments, which may prevent future losses rather than generate immediate returns, struggle to compete for limited capital for efficiency upgrades with shorter horizons.
Similarly, investment in adaptation is a sunk cost until disaster strikes and avoided losses can be calculated. Some 27% of companies cite misaligned incentives between procurement and sustainability functions as a key barrier.
The solution requires more than better communication. It demands structural change. CFOs must take ownership of sustainable finance frameworks, ensuring that climate metrics sit alongside financial KPIs in strategic planning processes.
This is not a theoretical recommendation.
Research across multiple sectors shows that CFOs are uniquely positioned to drive ESG integration because they control capital allocation, set performance metrics, and report to boards. By establishing standardised climate risk frameworks that apply across all business units, finance functions can ensure consistency, reduce duplication, and close coverage gaps.
Cross-functional governance structures also help. Several companies have created sustainability councils that include finance, operations, procurement, and strategy leaders, meeting regularly to align priorities and resolve trade-offs. Others have embedded sustainability analysts within finance teams, creating internal capacity to translate climate data into financial reporting.
These approaches share a common logic. Sustainability cannot remain the responsibility of a single function. It must be integrated into the decision-making structures that govern how capital is allocated, how risks are managed, and how performance is measured.
Capture the resilience premium
The transition to a low-carbon economy represents one of the most disruptive changes the food and beverage sector has faced. Companies that quantify climate risk in financial terms, integrate it into strategic planning, and align incentives across business units will capture the resilience premium. Those that maintain the disconnect between sustainability ambition and financial execution risk being left with stranded assets, operational fragility, and investor scepticism. The gap is measurable, the solutions are proven, and the commercial case is compelling. The question facing boards is no longer whether to integrate climate into financial strategy, but whether they can afford another quarter of delay.
