Climate and natural capital are increasingly central to business performance and corporate strategy. Weather volatility already affects firms: a one-standard-deviation adverse shock reduces retail sales by roughly 8% of a day’s revenue within three weeks, with limited adaptation to extreme heat. Natural capital accounting—pricing negative externalities—is emerging as a critical tool, exemplified by Kering’s €546 million environmental cost estimate and Danone’s early carbon-adjusted earnings. Yet, efficiency gains often trigger rebound effects, offsetting sustainability benefits, underscoring the need for systemic policies such as carbon taxes. Evidence shows carbon markets can work: the EU ETS reduced emissions by 1.2 billion tonnes from 2008–2016. Firms can also address collective action problems; Natura’s stakeholder-oriented model preserved 730,000 hectares of rainforest by aligning incentives with local communities. Climate change further affects sovereign and corporate credit risk: under high-emissions scenarios, most countries face rating downgrades, significantly increasing global borrowing costs and financial instability.