This summer is the hottest on record all around the world. From Europe to India to Arizona and Texas, day after day of unrelenting heat is pummeling people and impacting businesses. In the past 30 days, nearly 10,000 heat and rainfall records have been set globally. This is not new. Scientists have been warning of a warming world for decades. But the impact it would have on business and the economy was vague to say the least.
Until recently, most researchers assumed the impacts would be largely felt in the agricultural industry. It makes sense. Rising temperatures means a harder time growing and harvesting crops. Yet this summer has shed some light onto the real impact of rising temperatures and it’s a lot more widespread.
Recent research highlights the potential for significant damage to various sectors, consumer trends, and employee well-being. In this article, we will delve deeper into real challenges faced by US businesses due to extreme heat and explore practical solutions to tackle this pressing issue.
Changing Consumer Trends
As temperatures continue to rise, consumer behavior will naturally adapt to the new climate realities. Businesses need to understand these shifting trends and be prepared to meet the evolving demands of their customers.
Sometimes these changes show up in unexpected ways. This summer, for example, Unilever, the U.K.-based parent company of popular brands like Ben & Jerry's and Magnum, has noticed that the heat wave scorching Europe has actually led to a decrease in ice cream sales. It turns out that when it’s really hot out, people want a drink to quench their thirst rather than a heavy dairy-based dessert. Similarly, US businesses in the food and beverage industry may encounter challenges as heatwaves become more frequent and intense.
Other changes will be more expected. Shoppers will spend more time indoors, avoiding outdoor activities and likely spending more money online as a result. They will demand air conditioning, cooling stations, and splash pads in gathering spaces. To stay ahead, companies should consider offering climate-friendly products and services that align with the growing consumer preference for cooling down. Eco-friendly, energy-efficient, and heat-resistant solutions will become increasingly desirable, presenting opportunities for innovation and market differentiation.
Impact on Employees
The impact of rising temperatures on the workforce, particularly in construction and agriculture, cannot be underestimated. These sectors heavily rely on outdoor labor, making them highly susceptible to extreme heat. According to this report by Time Magazine, By 2050, construction is projected to lose 3.5% of its total annual economic activity to heat ($1.2 billion per year), with agriculture losing 3.7% ($130.7 million per year).
In the service industry, where millions of Americans work, the overall losses from extreme heat are projected to be even bigger. As temperatures soar, people are more likely to feel tired or sick and to work more slowly. This can be incredibly dangerous, especially in jobs not protected by air conditioning. Workers in areas like food service or transportation can be exposed to dangerously high temperatures. You would think this is a problem of the past, but UPS drivers just negotiated a deal in June to finally provide air conditioning in delivery vans that can reach up to 140 degrees Fahrenheit on a hot day. The reality is, the service sector faces losses of $2.8 billion a year—0.7% of its economic activity—by 2050.Businesses must prioritize employee well-being, invest in protective measures, and create heat-safe work environments to mitigate the impact on their workforce.
Impact on the Housing Market
The housing market is not immune to the consequences of climate change. As extreme weather events become more frequent and intense, the risk of damage to homes and infrastructure increases significantly.
High-risk homes located in vulnerable areas, such as coastal regions or flood-prone zones, are at greater risk of damage from hurricanes, floods, and extreme heatwaves. As a result, homeowners, insurers, and the government may face trillions of dollars in long-term damages. The strain on the housing market can lead to property value fluctuations, insurance premium hikes, and potential financial crises.
To address this issue, businesses and policymakers must work together to implement resilient building practices and sustainable infrastructure. Investing in climate-resilient construction and developing urban planning strategies that consider climate change risks are essential steps to safeguard the housing market.
Widening Inequality in the South
Regrettably, the impact of rising temperatures is not distributed evenly, and the poorest third of counties in the US is expected to bear the brunt of climate change consequences, amplifying existing social and economic inequalities. Most of those counties lie in the South.
Communities in the South already face socio-economic challenges, and the effects of extreme heat will exacerbate these disparities. To address this disparity, targeted efforts are needed to support vulnerable communities in adapting to climate change. Equitable access to resources, healthcare, and climate-resilient infrastructure can help reduce the negative impact on low-income areas.
It’s clear we won’t be beating the heat anytime soon as “hottest summer on record” is becoming an annual trend. It’s also clear that rising temperatures pose a significant threat to US businesses, impacting everything from consumer spending habits to employee wellbeing and even the US housing market.
To effectively weather the coming storm, businesses must take proactive steps towards sustainability and resilience. Embracing eco-friendly practices, investing in heat-resistant infrastructure and products, and prioritizing employee welfare are crucial actions to succeed in the coming decades.