As Natural Disasters Intensify, Corporate America Increases Spending–But Measuring Impact Lags

Wildfires in Maui. Hurricane Idalia in Tampa. Tropical storm Hilary in California. They are just a few of the events in today’s era of natural disasters, with 2023 poised to be a record year for US climate and weather catastrophes. 

61% of US companies have raised their total philanthropy giving for natural disasters levels in recent years—and they expect this trend to continue. Despite increased spending, fewer than half of firms conduct planning exercises to prepare for natural disasters, or routinely evaluate the impact of their efforts. And only 28% collaborate with other peer companies in their natural disaster efforts. 

At the same time, the new report reveals employees—ahead of the CEO and C-Suite—have the broadest influence shaping corporate disaster response efforts, influencing the response at 93% of firms. Moreover, companies say employees will exert an even bigger influence in the years ahead.

“Businesses need to consider natural disasters a core business risk and prepare accordingly. That means identifying risks to the company, its suppliers, customers, and other stakeholders; mapping the company’s resources to address disaster needs; conducting scenario planning; and coordinating with government and other companies to prepare for and respond to disasters,” said Paul Washington, Executive Director of The Conference Board ESG Center. “Writing checks and deploying volunteers after a disaster strikes is necessary, but insufficient today.”

Produced in collaboration with emergency financial relief provider E4E Relief, the report presents insights for companies to enhance their disaster response capabilities. Informing the insights are the findings of a survey, conducted by The Conference Board, of 100 major US and multinational companies about their disaster philanthropy practices.

Additional findings and insights include:

Most companies have increased their disaster philanthropy budgets and response levels in recent years—and they expect this trend to continue:

• 61% have increased their overall annual disaster philanthropy giving levels since 2020.
• 53% have increased the number of natural disasters they have responded to since 2020.

Looking ahead, the growing threat of disasters is closely linked to climate change concerns:

• 89% of executives expect climate change to significantly affect their programs and spending for disaster response over the next five years.
• Other major challenges cited by respondents include food insecurity (50%), health pandemics and infectious diseases (48%), and war and armed conflict (43%).

Virtually all companies expect natural disasters to increase in frequency, intensity, and complexity:

• In the coming years, companies anticipate an increase in the frequency of disasters (91%), the intensity of disasters (77%), and the complexity of disasters (59%).

“Our survey highlights a potential tension that needs to be addressed. On the one hand, employees play a leading role in shaping corporate disaster philanthropy, and companies need to prioritize their own employees affected by disasters. At the same time, companies today must think beyond their own employee base or operations in preparing for and responding to disasters,” said Andrew Jones, Senior Researcher at The Conference Board ESG Center. “With only 28 percent of firms partnering with other companies when responding to disasters, and only 23 percent seeking guidance from government on non-profit partners, there is a significant opportunity for corporations to increase their level of external collaboration and bring their complementary skills and expertise to bear.”

Despite an even more challenging landscape ahead, fewer than half of companies engage in strategic planning and scenario analysis relating to natural disasters:

• 57% of companies do not consider “what if” scenarios and do not undertake strategic planning for potential future natural disasters.
• While this kind of planning is often practiced in risk management, crisis management, and strategic planning functions, it should become ingrained in disaster response as well.

Immediate relief is the primary focus of corporate disaster philanthropy, but companies have significant value to add in other phases:

• Virtually all companies (96%) commit resources to relief and immediate assistance.
• 72% of firms also extend their support to short-term recovery; 45% contribute to long-term reconstruction and rebuilding; and 42% contribute to preparedness.
• While companies are committing their resources predominantly to immediate relief, they have significant value to add in other phases, such as post-disaster reconstruction and pre-disaster preparedness. The latter is particularly important for building resilience in vulnerable communities and reducing the need for relief.

Of all stakeholders, employees are the most significant drivers of corporate disaster response efforts:

• 93% of companies cite employees as a main driver of response, followed by disaster-affected communities (71%); CEO and C-suite (68%); and NGOs and non-profit organizations (66%).

This trend will continue, as most companies expect employees to have an even stronger influence over the next five years:

• Companies also cite employees as the main drivers of response in the next five years (84%); followed by disaster affected communities (59%); NGOs and non-profit organizations (58%); and CEO and C-suite (53%).

“For most companies, ensuring the safety of their employees is the top priority during disasters. In fact, 69 percent of companies provide direct financial assistance through a dedicated employee relief fund,” said Holly Welch Stubbing, President and CEO of E4E Relief. “The financial and social impact of emergency relief on employees can be profound, which in turn generates tangible business benefits for the company and its stakeholders.”