The most telling shift in climate reporting is not happening in sustainability reports. It is showing up in earnings calls, where weather volatility is increasingly being discussed as a direct pressure on margins, pricing and supply continuity.
That change was visible at Hershey in May 2024, when chief executive Michele Buck told analysts that surging cocoa costs would not hit fiscal 2024 because of hedging and supply-chain diversification, but warned that sustained high prices...
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could create inflationary pressure in 2025. The remarks reflected a broader reality across food and beverage companies: climate-linked disruption is no longer being framed mainly as an environmental issue, but as a financial one.
Cocoa has become one of the clearest examples. Record prices in early 2024 were driven in large part by poor weather in West Africa, where erratic rainfall and crop disease have squeezed yields. Industry reporting at the time showed cocoa reaching historic highs, forcing chocolate makers to consider price increases and other measures to protect margins. For companies heavily exposed to a narrow group of origins, the cost shock has been immediate and visible.
Coffee tells a similar story. Olam Group’s 2024 annual report highlighted the contribution of its coffee and cocoa business, ofi, to a 9.2% rise in earnings before income tax to S$1.9 billion. The company also pointed to its decarbonisation plans and said it would adopt the Task Force on Nature-related Financial Disclosures in 2025, signalling that climate and nature risks are moving further into the centre of financial reporting.
The broader pattern is becoming harder to ignore. Resource-dependent businesses are finding that weather volatility, not just commodity cycles, is driving supply shortages, higher procurement costs and more frequent price resets. The impact is especially acute where sourcing is concentrated in one geography, where suppliers are financially fragile, or where transport systems are exposed to storms, drought or flooding. In each case, climate stress can turn a temporary disruption into a structural cost problem.
That is why the disclosure landscape is changing as well. The climate reporting framework now being used by many large companies requires physical risks to be set out more clearly, including acute events such as extreme weather and chronic shifts in temperature and rainfall. Under the ISSB’s IFRS S2 standard, and under Europe’s corporate sustainability rules, companies are expected to explain which parts of the value chain are exposed, over what time horizon, and with what likely financial consequences.
For procurement and finance teams, the practical response is straightforward in principle, if demanding in execution. First, map the exposure. Many companies still do not know where their tier-one and tier-two suppliers sit relative to climate vulnerability. Second, reduce concentration risk by diversifying origins, while also investing in supplier resilience through measures such as soil health improvements, agroforestry and regenerative practices. Third, treat climate resilience as a core procurement issue rather than an optional sustainability spend.
The companies moving earliest are the ones recognising that climate risk is already a balance-sheet and earnings-call problem. The question for everyone else is no longer whether it will reach the P&L, but how quickly.
Source: Noah Wire Services
