Staying Ahead Of Extreme Heat's Far-Reaching Impact On Business

Forbes

3 days ago

Dan Lambe is the CEO of the Arbor Day Foundation.
Extreme heat has emerged as one of the costliest threats to businesses today. Researchers from the World Economic Forum predict that by 2035, heat will cause up to $448 billion in profit losses across all S&P Global listed companies.
Still, many businesses can be blindsided by the heat because they don't understand the many diverse and immediate impacts of extreme heat. High temperatures aren't just inconvenient or uncomfortable. Heat has the ability to collapse supply chains, disrupt business operations and drain finances.
How Does Heat Impact Business?
The most obvious detriment of extreme heat is its impact on people. Industries that depend on outside workers see sharp declines in labor hours because of unsafe conditions, while those that depend on inside workers see a rise in the costs of cooling offices, warehouses and building facilities. In the U.S. alone, high temperatures cost $100 billion annually in lost productivity. The International Labor Office estimates that in just five years, the total number of lost hours globally will equate to 80 million full-time jobs.
Extreme heat can also create raw material shortages. Prolonged heat leads to drought, which can dry up the resources many industries depend on. For example, losing tomato crops (typically grown in the spring and summer) could be a major detriment to some food manufacturers and restaurants, causing prices to spike.
When systems not directly in the control of businesses, such as infrastructure, are hit by heat, they can greatly impact business operations. For example, multiple states have experienced pavement roads buckling due to skyrocketing temperatures; it's led to more than 50 road closures in Wisconsin alone. In 2019, a study warned that 25% of U.S. steel bridges could collapse by 2050 because of rising heat. Undoubtedly, these kinds of closures and repairs would keep goods and people from moving, causing missed deadlines, costly disruptions and frustrated customers.
On top of that, power grids are under pressure like never before. From 2014 to 2023, summer power outages became 60% more common because of heat stress. Considering the potential rise in heat-related deaths, it's no surprise that consumer engagement drops significantly during extended periods of high temperatures.
What Can Businesses Do To Adapt?
Nearly every industry is impacted by high temperatures in some way, so the lesson is clear. Businesses and their bottom lines can't afford to wait to invest in resilience. After all, the World Resources Institute found that every $1 spent on adapting business operations to a warmer world yields more than $10.50 in benefits across the span of 10 years. At organizations like the Arbor Day Foundation, we help companies determine how they can use trees to maximize that return on investment through future resilient strategies that lead to tangible, positive benefits for their business and the communities they operate in.
Tree planting remains one of the simplest and most powerful actions companies can take. Trees naturally lower air temperatures by up to 10 degrees Fahrenheit—a lifesaving difference for people working outside. This is especially true in dense urban areas where heat is easily trapped by pavement and concrete. Strategically planted trees can help reduce offices' and facilities' energy demands, therefore lowering air conditioning costs and easing the burden on power grids. On top of that, access to green space makes employees happier.
For businesses that operate in or rely on agriculture specifically, another strategy is investing in agroforestry practices. Trees incorporated into crop lands can provide more shade and attract water through their roots. This can mitigate the effects of drought and other heat-related challenges, giving businesses an opportunity to support the long-term viability of their supply chains.
Unfortunately, heat will be a challenge we all have to face for many years to come. Figuring out how to adapt to it and, ultimately, prevent it is in our collective best interest. Businesses that act now can stay ahead of the heat and lead the way toward a more resilient, sustainable future for everyone.
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