Enhancing Firm Resilience to Climate Change: A Review of Impact, Adaptation Strategies and Policy Options

ABSTRACT This survey examines how firms in developing countries adapt to extreme and gradual changes in climate, highlighting the significant impact it has on firm performance. By integrating insights from economic geography and firm dynamics literature, the survey underscores the challenges posed by weak infrastructure, financial constraints, and firm capabilities, while also exploring the role of private and public resilience policies. Key findings reveal that firm attributes, such as size, sector, and financial access and managerial practices influence firm resilience, with larger and more productive firms showing greater adaptability. Additionally, climate‐induced uncertainties affect investment and asset valuation, particularly for smaller firms in vulnerable sectors. The survey emphasizes the importance of strategic policy interventions to support adaptive investments and mitigate climate‐related risks, noting that firms with better managerial capabilities and access to insurance are more likely to “build back better” after climate shocks.