There has been a more than twenty-fold increase in national climate legislation and policy over the last 20 years, research from global law firm Clyde & Co has revealed.
In a report published this week, the researchers revealed how there are now over 1,500 laws and executive acts addressing climate change, compared to just 70 in 1997.
And these laws are giving rise to new liability risks that pose a serious risk to companies' future profitability, according to Clyde & Co partner, Nigel Brook.
"Businesses are coming under increasing scrutiny from regulators and enforcement bodies and face an ever-growing body of climate-related law and regulation," he continued.
"The physical impacts of climate change are already significantly impacting assets, investments, workforce, supply chains, input costs and outputs, and the cost of capital and insurance."
Despite progress identifying physical climate threats, the researchers warned that climate-related liability risks are less well understood, but that this will soon change.
The latest report from Clyde & Co is an in-depth guide to these risks.
It comes after the UK government earlier this month outlined its expectation for all listed companies and large asset owners to report their vulnerability to climate risks.
And last year the trustees of 14 UK pensions schemes received letters from climate lawyers warning of legal action if they do not consider risks associated with climate change.
Brook said companies that fail to adjust to the changing risk landscape might be unable to attract investment, lose competitiveness, and fall below best practice standards.
"All of this might give rise to lawsuits," he continued. "Businesses, and the directors and officers who run them, can no longer ignore climate change.
"And as the world transitions away from fossil fuels, regulation, policy, changes in consumer habits and investor pressure carry the potential to devalue or 'strand' carbon-intensive assets, product lines and business models."