Climate change is not only disrupting supply chains and asset values, it is also quietly reshaping companies' choice of business partners.
New research based on nearly two decades of data from thousands of US-listed firms shows that companies exposed to higher climate change risks are deliberately reducing their reliance on a small number of major customers. Instead, they are spreading sales across a broader customer base as a way of managing risk.
The study , published in Business Strategy and the Environment, finds clear evidence that climate risk is driving this strategic shift, rather than simply coinciding with it. Firms facing greater exposure to extreme weather, climate-related disruption, or regulatory transition risk are less likely to concentrate revenue among a handful of large buyers.
Amplifying shocks
Authors Dr Eric Boahen, Dr Cuong Nguyen and Thi Thuy Trang Nguyen found this behaviour is particularly pronounced among firms with strong corporate social responsibility performance, higher levels of innovation, and heavy investment in physical assets such as plants and infrastructure. These firms appear to recognise that customer concentration can amplify climate shocks.
"What this evidence shows is that climate risk is no longer abstract or future-facing. It is shaping everyday business decisions in the here and now," said Dr Boahen, Cluster Lead for Accounting, Finance and Economics at the University of East London.
"Boards and executives are not just thinking about emissions or disclosure. They are quietly rethinking who they depend on for revenue. When climate shocks can hit firms and their biggest customers at the same time, relying too heavily on a small number of clients becomes a strategic vulnerability."
The research draws on real-world behaviour observed across almost 4,800 firms over a 17-year period.
Why it matters
For investors and lenders, the study highlights customer concentration as a potential blind spot in climate risk assessment. Companies with diversified customer bases may be better insulated against earnings volatility, financing stress, and supply-chain disruption.
For boards and regulators, the findings point to customer structure as a governance issue. Persistently high customer concentration in climate-exposed regions may signal weaknesses in risk management.
"Climate resilience is not just about where assets are located or how much carbon a firm emits," Dr Boahen said. "It is also about how exposed a company is through its commercial relationships. Customer concentration is now a climate issue, whether companies label it that way or not."
Climate Change Risks and Customer Concentration: Evidence from US-Listed Firms by Thi Thuy Trang Nguyen, Dr Eric Boahen and Dr Cuong Nguyen is published in Business Strategy and the Environment
