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Companies in Africa and South East Asia will be most impacted by future heat stress

Organizations operating in Africa and South East Asia are expected to bear the brunt of the impacts of rising temperatures over the next 30 years, according to research by Verisk Maplecroft.

Workers in the highest risk regions will struggle to cope with mounting heat stress, but increasing urbanization and booming demand for air conditioning will also pose a major threat to reliable electricity supplies. Taken together, the risk of disruption for companies operating in, or sourcing from, affected countries will substantially increase unless climate adaptation measures are implemented, Verisk Maplecroft says.

In all, 48 countries are rated ‘extreme risk’ in Verisk Maplecroft’s Heat Stress (Future Climate) Index, with African countries accounting for nearly half that number. Europe remains the region most insulated from the economic impacts of rising heat stress. The 10 lowest risk countries include the UK, Ireland, Finland, Norway, Sweden, and Denmark. However, academics warn that heatwaves similar to the 2018 one will become far more common in Europe without actions to curb emissions, which could drive up heat stress risks.

Agriculture, oil and gas, and mining are sectors where rising heat stress will impact labour capacity the most, as work is highly intense and often outdoors. Heat stress can reduce worker productivity by causing dehydration and fatigue, leading to slower work and even death in extreme instances.

“In export markets, labour capacity losses could mean price rises for importers if product availability drops or production costs increase,” says Alice Newman, Environment and Climate Change Analyst. “Supply chain disruption may also drive businesses to consider sourcing from lower risk locations, which would have a major knock-on effect on regional economies.”

Power issues

According to the International Energy Agency, global energy use for cooling amounted to just over 2,000 terawatt hours (TWh) in 2016 – by 2050, this figure is set to triple, which could leave businesses facing spiraling operational costs and greater risks of power outages, says Verisk Maplecroft.

Rising temperatures, soaring population growth, and rapid urbanization mean that the proportion of the global population living in areas classified as ‘extreme risk’ will be five times higher by mid-century, sending energy demand surging.

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