Climate Risk on the Balance Sheet: Quantify, Prioritize, Act
For decades, much of Mexico’s productive sector — and industry globally — underestimated the consequences of global warming. Today, climate change has evolved into a material risk that must be reflected on corporate balance sheets, influencing investment decisions and project implementation. Companies are now required not only to prevent disruptions but also to ensure operational continuity and respond swiftly to adverse events.
Climate risk is no longer a distant environmental concern; it has become a financial variable reshaping how companies evaluate investments, manage operations, and safeguard long-term resilience. Across industries, leaders are rethinking traditional risk models and integrating climate considerations into core business strategy.
This transformation is redefining the role of sustainability within organizations. As Ricardo Velázquez, President, AMENEER, explains: “Whether we like it or not, we live in a capitalist world whose objective is to generate development, but we must find a way to do it sustainably.” His observation reflects a growing alignment between financial performance and environmental responsibility, where sustainability is embedded in value creation rather than treated as a peripheral initiative.
That integration is increasingly visible across supply chains. Velázquez emphasizes that “the goal is to mitigate climate change and prevent temperatures from rising year after year… through collaboration with suppliers and across the value chain,” signaling that climate exposure must be addressed end-to-end rather than within isolated business units.
This systemic view is reinforced by Alicia Silva, Director and Founder, Revitaliza Consultores, who warns that resilience cannot be limited to physical assets. “Resilience is not just about the asset itself; the supply chain must also be mapped. What good is staying operational if your raw materials or labor are disrupted?” In practice, this requires companies to move beyond site-level mitigation strategies and adopt a broader understanding of interconnected risk.
Operational realities are already forcing that shift. “We have seen workers fainting in factories due to extreme heat. We had not properly named or quantified these phenomena,” Silva said. The historical inability to quantify such risks has delayed action, but that is rapidly changing. Financial tools such as Climate Value at Risk (Climate VaR) are emerging to translate environmental exposure into monetary terms. As Silva notes: “How much does it cost to halt operations because cooling your facility seemed too expensive?” The question underscores the new paradigm — climate risk must be measured in financial impact, not abstract probability.
Velázquez complements this perspective by noting how the nature of climate risk has evolved. “Addressing climate risk is no longer just a reputational issue; it has become operational.” Organizations are increasingly embedding sustainability into decision-making structures traditionally reserved for finance and risk management. The emergence of roles such as Chief Financial Sustainability Officer — already more common in Europe — illustrates how governance models are adapting.
“The information doesn’t lie. Climate change is not a theory — it is an operational reality across the country,” said Antonio García, Social Responsibility Manager, Liverpool. In Mexico, where exposure to extreme weather, water scarcity and temperature volatility is particularly high, this reality demands comprehensive systems capable of anticipating and mitigating impacts. García explains that “integrated risk management models allow us to prevent impacts on our customers and employees,” expanding the focus beyond infrastructure.
This human-centered approach aligns with Silva’s observations on workforce vulnerability and reinforces the idea that operational continuity depends as much on people as on physical assets. García acknowledges that some risks are unavoidable but emphasizes containment. “There are inherent operational risks, but we must manage them to prevent them from affecting our people and customers.” This layered approach — anticipation, mitigation and protection — reflects a more mature understanding of climate exposure.
The financial dimension of climate risk becomes even more evident when viewed through capital allocation and infrastructure. Brenda Pequeño, Manager of Investor Relations, Sustainability and Corporate Communications, CFECapital, highlights how energy infrastructure is evolving in response. She cited a newly inaugurated power plant capable of reducing water consumption by 90% while monitoring energy supply in real time — an example of climate considerations being embedded into core assets.
Such investments are part of a broader systemic effort. As Pequeño explains, the Federal Electricity Commission plays a central role across the generation, transmission and distribution chain. “There are preparedness measures to prevent service interruptions caused by climate events,” she noted, underscoring the strategic importance of energy resilience for industrial operations.
These shifts are reinforced by financial and regulatory trends. “Seventy-five percent of institutional investor capital comes from long-term vehicles such as pension funds, and they are increasingly required to consider ESG criteria,” Pequeño explained. However, she stressed that governance remains foundational: “A robust governance policy, with clear committees and rules, is essential to protect investors’ interests. Without it, all other elements become too weak.”
Edna García, ESG and Public Affairs Director for Mexico, Atlas Renewable Energy, brings the discussion back to geography. “Climate change is no longer just an environmental risk; it is a financial risk linked to operations across industries,” she said. In Mexico, climate exposure varies significantly by region. Water stress in northern and central states is becoming structural, affecting operations, permitting processes and community relations. Coastal regions, meanwhile, face recurring hurricane risks capable of damaging infrastructure and halting production.
To navigate this complexity, García advocates a dual investment approach: strengthening infrastructure to withstand extreme events while deploying advanced monitoring systems capable of predicting and responding to climate-related disruptions. The combination of physical resilience and digital intelligence is becoming essential for maintaining operational continuity.
Across sectors, a clear consensus is emerging: climate risk must be quantified, prioritized and embedded into financial and operational decision-making. Tools such as Climate VaR, integrated risk management frameworks and ESG-driven governance structures are no longer optional — they are fundamental to competitiveness in an increasingly volatile environment.