Legal advisers are urging companies to accept that extreme weather is no longer an occasional shock but a recurring business risk that must be systematically managed, after a summer marked by heat, drought, wildfires and flooding pushed climate-related disruption up corporate agendas.
From exceptional to foreseeable
The warning follows concerns from the UK Met Office that the world may be heading into what could be "the largest El Niño in living memory". Legal specialists told Sustainable Views that weather events once treated as exceptional are increasingly foreseeable, and therefore may attract greater expectations that companies should anticipate and adapt to them.
That shift has several implications for companies operating in South Africa and internationally: boards and management teams will face pressure to strengthen risk registers, revise continuity plans and document the steps they have taken to reduce exposure to weather-related disruptions.
What businesses need to consider
- Risk assessment and disclosure: Events previously described as rare may now need to be modelled and disclosed to investors and lenders as part of routine risk management.
- Operational preparedness: Supply chains, production facilities and logistics planning must account for higher probability of heat, drought, wildfires and flooding affecting operations.
- Liability and regulatory expectations: If extreme weather is judged foreseeable, courts and regulators may scrutinise whether firms took reasonable steps to prevent or mitigate impacts.
Those responsibilities change how boards must demonstrate fiduciary oversight and how companies prioritise capital expenditure to harden assets or shift strategies to reduce exposure.
Summer’s pattern of extremes
| Observed phenomena | Relevance to business planning |
|---|---|
| Severe heat | Worker health and productivity, cooling costs, infrastructure stress |
| Drought | Water-dependent operations and supply constraints |
| Wildfires | Asset damage, insurance claims and supply chain disruption |
| Flooding | Transport interruptions, facility damage and business interruption losses |
These phenomena, the source reports, pushed extreme weather up the corporate agenda over the summer. For South African firms — many of which already contend with power and logistics constraints — the prospect of more frequent weather extremes will complicate existing operational vulnerabilities.
"the largest El Niño in living memory"
Consequences for balance sheets and insurance
While the report did not publish specific cost estimates, the practical consequences are clear. Businesses that fail to anticipate weather risks may face higher costs from interrupted production, emergency repairs, increased insurance premiums or challenges in securing finance where lenders require enhanced risk management. For household-facing companies, higher operating costs can translate into price pressure for consumers, squeezing discretionary spending.
Legal advisers flag an important legal nuance: when a risk becomes predictable, failing to plan for it may attract scrutiny in litigation or regulatory reviews. Companies therefore need to document the steps they take to assess and address weather-related threats.
What boards and managers should do next
- Update risk assessments to reflect climate-related scenarios that were previously considered exceptional.
- Strengthen continuity and business interruption plans, with clear escalation triggers tied to weather forecasts and warnings.
- Engage with insurers, lenders and investors to align on disclosure and mitigation measures.
As the Met Office prepares for a potentially record El Niño, businesses — in South Africa and beyond — will be expected to move from ad hoc responses to embedded, documented plans that demonstrate they anticipated and sought to limit climate-driven damage. The window for reactive measures is narrowing; the legal view is that foreseeability brings responsibility.
WE NEWS does not provide financial or legal advice. Businesses should consult legal and risk professionals for guidance specific to their circumstances.
