Climate Change Risk and Financial Performance in Cyprus

managers from 30 firms in Cyprus regarding climate change risks and
their impact on financial performance. The research targets a diverse
range of industries, with a significant representation of small and
medium-sized enterprises (SMEs). The findings reveal that most
firms exhibit a moderate understanding of climate change risks, with
larger firms being more proactive in conducting formal assessments
and integrating these risks into their strategic planning. Key risks
identified include extreme weather conditions, increased energy
costs, and regulatory changes.
The financial impact of climate change varies significantly across
industries and firm sizes. Larger firms, such as those in
manufacturing and retail, manage to stabilize profitability through
technological upgrades and efficiency improvements. In contrast,
financial services firms face substantial challenges due to increased
insurance claims and regulatory costs. Smaller firms report adverse
effects on profitability due to rising material costs, though
investments in renewable energy provide some mitigation. The
ability to adapt to regulatory changes and market demands also plays
a critical role in sustaining profitability in the face of climate change.
This study underscores the critical need for enhanced climate change
risk awareness, strategic integration, and supportive measures to
bolster resilience and profitability across all sectors in Cyprus,
emphasizing the importance of proactive climate risk management as
a cornerstone of sustainable business practices.