Climate change is no longer only unsettling supply chains and eroding asset values; it is also quietly influencing the way companies choose and manage their business relationships. Beyond the visible impacts on operations and infrastructure, environmental risk is now shaping strategic decisions that once seemed unrelated to climate concerns. One of the most apparent shifts is happening in how firms structure their customer bases, as executives increasingly recognise that who they depend on for revenue can either expose them to greater vulnerability or help protect them from future shocks.

New research drawing on nearly two decades of data from thousands of publicly listed companies in the United States shows a clear pattern. Businesses facing higher levels of climate-related risk are deliberately reducing their reliance on a small number of major customers. Instead of concentrating sales among a few large buyers, these firms are spreading revenue across a wider group of clients. This diversification is emerging as a practical way of managing uncertainty in a world where extreme weather, regulatory change, and environmental disruption are becoming more frequent.

Published in Business Strategy and the Environment, the study finds that climate risk is actively driving this strategic shift rather than merely coinciding with it. Companies exposed to greater threats from storms, heatwaves, flooding, or climate-related policy transitions are significantly less likely to allow a handful of customers to dominate their income. The research suggests that firms are learning from experience, adjusting their commercial structures to avoid situations where a single climate event could damage both their operations and their primary sources of revenue at the same time.

The effect is powerful among organisations with high levels of innovation, strong corporate social responsibility performance, and heavy investment in physical assets such as factories and infrastructure. These firms appear more aware that customer concentration can magnify financial shocks. When assets are expensive and difficult to relocate, losing one major customer due to climate disruption can have long-lasting consequences. Diversifying revenue streams, therefore, becomes a form of resilience, not just a growth strategy.

For investors and lenders, the findings highlight an often-overlooked dimension of climate risk. Traditional assessments tend to focus on physical exposure or carbon emissions, yet customer structure may be just as important. Companies with broad, diversified client bases may be better insulated from earnings volatility, financing stress, and sudden downturns caused by environmental events. Concentrated revenue, by contrast, can act as a pressure point when climate shocks ripple through interconnected businesses.

For boards and regulators, the study reframes customer concentration as a governance issue. Persistently high dependence on a small group of buyers in climate-exposed regions may signal weaknesses in risk management and long-term planning. Climate resilience is no longer only about where assets are located or how sustainable operations appear on paper. It is also about how exposed a company is through its commercial relationships. In today’s changing business landscape, customer concentration has quietly become a climate issue in its own right.

More information: Thi Thuy Trang Nguyen et al, Climate Change Risks and Customer Concentration: Evidence From US-Listed Firms, Business Strategy and the Environment. DOI: 10.1002/bse.70495

Journal information: Business Strategy and the Environment Provided by University of East London