How Companies Face Extreme Heat: The Importance of Mitigation Investment and Carbon Credits
The risk of extreme heat is already impacting companies, with economic losses occurring in net profit and supply chains.
A recent report from financial services firm Morgan Stanley states that 57 per cent of surveyed companies experienced operational impacts within the past year due to the climate crisis. This percentage is followed by extreme weather and storms affecting 53 per cent; forest fires or haze affecting 36 per cent; drought or water scarcity affecting 34 per cent; and flooding or rising sea levels affecting 33 per cent.
Increased costs, such as insurance and supply problems, represent the most common impact experienced by companies at approximately 54 per cent. This is followed by workforce disruptions, such as employee safety and absenteeism at 40 per cent; revenue losses from business interruptions or supply chain failures at 39 per cent; shifts in customer or client demand at 35 per cent; increased investor scrutiny, particularly regarding risk management, at around 34 per cent; and damage to physical assets or infrastructure at 31 per cent.
Extreme heat is projected to cause substantial economic losses stemming from health and human welfare risks. Indeed, extreme heat could eliminate trillions of United States dollars of global productivity annually from 2030 onwards.
New interest in adaptation and resilience is shaping investment in the public and private sectors as extreme heat becomes a priority for governments and boards of directors. Moreover, companies are experiencing reduced productivity due to high temperatures.
Insurance companies have also sounded the alarm regarding the direct impact of extreme heat and cascading effects on the frequency of droughts and forest fires.
“High temperatures are expected to continue (and become more extreme) in the future, which means companies must take action now,” said Gabriel Labbatte, Head of Climate Mitigation Unit and Chair of the UN-REDD Global Program Team at UNEP, according to Edie.net on Monday, 16 March 2026.
The private sector must invest in climate action within and beyond value chains to build resilience, reduce the worst impacts of global warming, and protect their profits. This applies equally to industries with global supply chains, as much of global procurement depends on geographical regions highly vulnerable to climate crisis.