Foreword

It is no secret that the impacts of climate change are contributing to increased volatility of commodity prices and posing a growing risk to the financial stability of food and drink (F&D) businesses. Many of our clients have identified this trend as a material threat to their performance. As weather patterns become more unpredictable, producers of key ingredients find it harder to forecast harvest volumes and meet supply commitments. When contracted volumes fall short, sourcing replacement ingredients on the open market often comes at a premium amplified by already constrained supply. In a sector defined by tight margins, such volatility can cause serious disruption.

While alternative ingredients may offer a temporary workaround, they often introduce new costs, operational risks, and potential impacts on product quality or brand integrity.

With no near-term solution to reverse climate change, the need for scalable, strategic risk-transfer mechanisms is clear. Insurance solutions that help mitigate the financial consequences of climate-related crop failures and price surges will become increasingly important to protecting the sector’s cost base and long-term viability.

To explore how the F&D industry can respond, we partnered with experts at Zurich and DLA Piper to develop this report. We examine the scale of the challenge under various climate scenarios and outline both traditional and emerging responses—from contractual protections to innovative tools like parametric insurance. This report is intended as both a practical guide and a call to action for industry leaders: to rethink resilience, embrace collaboration, and build solutions fit for an increasingly uncertain world.