Building Climate Resilience in Global Food, Agribusiness & Beverage

Building Climate Resilience in Global Food, Agribusiness & Beverage
August 15, 2025 9 mins

Building Climate Resilience in Global Food, Agribusiness & Beverage

Building Climate Resilience in Global Food, Agribusiness & Beverage

Climate change is now a central disruptor for FAB industries worldwide, impacting every tier, from raw production to global supply chains. Extreme weather, shifting rainfall patterns and regulatory changes are altering the landscape for every organization within the value chain.

Key Takeaways
  1. Climate change is reshaping the FAB sector, exposing protection gaps and testing the limits of traditional insurance. Unsustainable agriculture is further depleting natural resources, while also failing to ensure long-term food security.
  2. Data analytics, collaboration among governments, private companies and farmers, and the use of innovative farming techniques will foster climate resilience and sustainability in the sector.
  3. Combining innovation with risk management and cyber security, while using Aon’s experience to secure capital and safeguard supply chains, can give FAB firms a strategic edge .

Climate change and evolving climate regulations are disrupting crop yields, inflating commodity prices and straining supply chains. These pressures test the limits of traditional risk financing, making it crucial for food, agribusiness and beverage (FAB) businesses to transition from tactical adaptations to strategic, data-driven approaches that safeguard capital, stabilize revenue and enhance trust in the value chain across borders.

Challenges of Building FAB Resilience

Pressure on natural resources, such as over-extraction of water, soil degradation and nutrient depletion, coupled with rising disease risk, is lowering production even as demand for food rises.

Sustainable practices like regenerative farming and precision irrigation can offer resilience but are challenging for small producers to adopt due to the required investment and market volatility. Additionally, participation in carbon credit projects remains limited in countries like the U.S. due to financial, technical and logistical barriers.

Environmental, social and governance (ESG)-linked lending, climate disclosures and evolving regulation increasingly penalize fragmented or reactive risk management. Justin Gow, National Practice Leader for FAB in Australia says, “The need to build resilience is now — and solutions like parametric insurance and alternative risk transfer options like captives and protected cell captives are a good place to start tackling some of these challenges.”

5 Business Pay-Offs of Going Green in Agriculture

  1. Lower Insurance Premiums
    Sustainable practices can reduce exposure to climate-related losses, leading to more favorable insurance.
  2. Improved Yield Stability
    Adaptive sourcing, climate-smart agriculture and diversified value chains protect yield stability against climate shocks.
  3. Access to New Markets and Financing
    Strong ESG performance can open doors to sustainability-linked loans, green bonds and partnerships, premium market opportunities and preferred supplier status.
  4. Reduced Input Costs
    Sustainable practices like crop rotation and organic fertilization can reduce reliance on synthetic inputs, which have higher costs.
  5. Enhanced Brand Value and Customer Loyalty
    Investing in ESG credentials can strengthen reputation with customers and regulators, translating into pricing power and customer retention.

APAC

  • 01

    Market Dynamics

    Extreme weather, trade volatility, and regulation are disrupting agriculture and supply chains regionally. New Zealand is recovering from Cyclone Gabrielle, with dairy gains despite broader economic challenges. Australian farmers face tight margins and limited insurance.

  • 02

    Climate Finance & Risk Capital

    Farmers have a lack of trust toward insurance providers and are cautious about parametric solutions. Climate analytics and modeling support access to parametric and captives models. Small producers face barriers due to cost and digital literacy. Risk capital is shifting to strategic enablement.

  • 03

    Climate Analytics & Cyber Risk

    Agri-tech adoption (e.g., IoT, autonomous vehicles) introduces cyber and liability risks to the equation. Aon’s Climate Risk Monitor identifies climate “hot spots” and models crop vulnerability. AI boosts efficiency but increases cyber exposure. Infrastructure gaps hinder tech adoption.

  • 04

    Biosecurity & Disease

    Avian flu and other disease risks are rising. Food safety scrutiny and fragile supply chains drive insurance innovation. Parametric and captive models are being explored to fill coverage gaps.

  • 05

    Innovation & Collaborative Models

    Vertical farming and aquaculture are adaptive but costly. Infrastructure (e.g., irrigation) is critical. Public-private partnerships are growing, especially in Australia and India. Collaboration and education are key to scaling climate-smart farming.

EMEA

  • 01

    Market Dynamics

    Storms, floods, heatwaves and hail are damaging crops and infrastructure. Rainfall variability disrupts supply chains. Climate volatility affects commodities like coffee and cocoa. Regulatory pressure on climate disclosures is increasing.

  • 02

    Climate Finance & Risk Capital

    Climate volatility strains agribusiness. Analytics-integrated insurance and parametric are gaining traction. ESG-aligned solutions and Aon’s 3x3 model are driving transformation.

  • 03

    Climate Analytics & Cyber Risk

    Digital tools support climate reporting and insurance alignment. Cyber risk is rising with tech adoption and leaders often lack awareness. Tools like CyQu and Risk Analyzer Suite assess exposures and support scenario modeling.

  • 04

    Biosecurity & Disease

    Food safety scrutiny and pest/disease outbreaks are increasing. Weak surveillance systems hinder early response. Insurance is evolving to address biosecurity threats.

  • 05

    Innovation & Collaborative Models

    Fragile supply chains drive demand for scalable, data-driven solutions. Public-private efforts support regenerative agriculture and climate-smart subsidies. ESG investors and USDA funding back sustainable practices. Cross-border initiatives enhance resilience.

Latin America

  • 01

    Market Dynamics

    Latin America is at the forefront of both climate risk and opportunity in sustainable agriculture. The region has the potential to become a global benchmark for sustainability in agribusiness.

  • 02

    Climate Finance & Risk Capital

    Financial inclusion is essential to empower producers across scales — from smallholders to large agribusinesses. Investment in inclusive financial tools can support the transition to regenerative practices.

  • 03

    Climate Analytics & Cyber Risk

    Leveraging digital tools is key to enabling data-driven decision making and climate resilience.

  • 04

    Biosecurity & Disease

    Pest and disease outbreaks are rising. Weak surveillance systems hinder response. Insurance is adapting to biosecurity risks.

  • 05

    Innovation & Collaborative Models

    Cross-sector collaboration is critical to scaling innovation and building resilient supply chains. Regenerative agriculture and climate-smart practices are central to ensuring food security and economic growth.

North America

  • 01

    Market Dynamics

    Convective storms, wildfires and droughts dominate 2024 losses. A challenging infrastructure exists. Resilience investment is uneven.

  • 02

    Climate Finance & Risk Capital

    Climate volatility threatens supply sheds. Analytics-integrated insurance and parametric are gaining traction.

  • 03

    Climate Analytics & Cyber Risk

    Digitization introduces both opportunities and risk. Climate risk tools, such as Aon’s Climate Risk Monitor, help quantify climate-related threats by assessing impacts and identifying vulnerable crops. While AI and IoT adoption raise exposure, infrastructure gaps persist.

  • 04

    Biosecurity & Disease

    Climate and trade dynamics fuel threats. Insurance is evolving to address volatility.

  • 05

    Innovation & Collaborative Models

    Collaboration, education and public-private partnerships are key to scaling climate-smart farming. High costs and infrastructure gaps hinder adoption. Supply chain risks are driving insurance innovation. ESG investment and subsidies support scalable, data-driven, regenerative practices.

“The integration of renewable energy in agriculture is not just an opportunity but a necessity,” says Kirstin McMullan, Climate Risk Advisory Engagement Lead in Asia Pacific. “Equipping farmers with the right knowledge and tools is crucial for transforming the sector into a climate-smart powerhouse.”

Case Study: Brewing Resilience: Climate-Smart Coverage for a Global Coffee Leader

Case Study:
Brewing Climate Resilience for a Global Coffee Leader

Challenge: Fragile Crops and Rising Risks

Coffee yields in Central America may drop by nearly 90% by 2050 due to rising temperatures and erratic rainfall.1 Sourcing from limited regions heightens supply chain vulnerability. As a result, commodity prices for coffee have doubled.2

Solution: Data and Analytics-Driven Approach

Aon developed a dual-trigger parametric coverage for a global coffee company operating in Latin America using rainfall, soil moisture and satellite data — potentially linked to subsidies. This both stabilizes grower income and promotes regenerative farming aligned with ESG goals.

What is Climate-Smart Agriculture and How Can it Help?

Climate-smart agriculture is a foundation for sustainable growth, embedding robust risk identification, data-driven supply chain visibility and adaptive governance at every business level.

Practices like agroforestry, crop rotation and precision farming can restore soil health, boost biodiversity and build resilience to climate extremes. IoT sensors, satellite imagery, AI-powered forecasting and precision irrigation can monitor soil conditions, anticipate weather impacts and optimize inputs. Innovations like agrivoltaics, vertical farming and AI-driven analytics are expanding sustainable production into new geographies. Agritech innovator Halter,3 for example, develops sensor-equipped collars that allow farmers to guide their animals using virtual boundaries, optimize pasture management and detect potential health issues early — a glimpse into how agritech is driving both efficiency and sustainability.

Yet, Gow cautions, “In highly automated environments such as a greenhouse operation, a single cyber intrusion has the potential to disrupt entire crop cycles.”

Case Study: Brewing Resilience: Climate-Smart Coverage for a Global Coffee Leader

Case Study:
Empowering India's Rice Farmers: Scalable Risk Transfer through Public-Private Partnerships

Challenge: Climate Pressure, Financial Fragility

Rice farmers in India face erratic rainfall and yield uncertainty. Limited insurance and tight profit margins make financial protection inaccessible for many. Government-backed loans require risk mitigation to ensure planting confidence and income stability.

Solution: Parametric Innovation at Scale

Aon designed large-scale parametric insurance program that is triggered by rainfall and yield thresholds — with government support boosting adoption and affordability. It also ensures timely payouts, stabilizes income and builds trust, offering a replicable model for climate-smart agriculture

Making Resilience Pay: A Global Call to Action

Navigating global climate challenges demands more than incrementalism; it requires bold, strategic partnership. “The next wave of industry leaders will shape markets — not simply survive them,” says Tami Griffin, National Practice Leader for the FAB sector in the United States.

How prepared is your organization to convert risk into resilience? Explore proven, custom-fit solutions for your organization and supply chain. Start a conversation with our global FAB specialists today.

Aon’s Thought Leaders

Richard Fawcett
Industry Leader, Food, Agribusiness and Beverage, United Kingdom

Justin Gow
National Practice Leader, Food, Agribusiness and Beverage, Australia

Tami Griffin
National Practice Leader, Food, Agribusiness and Beverage, United States

Ciara Jackson
Enterprise Client Group Industry Leader, Food, Agribusiness and Beverage, Europe, the Middle East and Africa

Natalie Lim
Agriculture Retrocession Leader, Asia Pacific

Kirstin McMullan
Climate Risk Advisory Engagement Lead, Asia Pacific

Dominic Probyn
Head of Climate Strategy, Europe, the Middle East and Africa

Paulo Vitor Rodrigues
Practice Leader, Food, Agribusiness and Beverage, Latin America

David Sutherland
Area Manager, Agri Sector Acting Lead, New Zealand

1 Climate and Coffee, National Oceanic and Atmospheric Administratione
2 Navigating Packaging Prices: 2024 Outlook, Packaging Gateway
3 Halter

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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