Wildfires in Siberia, flash floods in Europe and scorching summers across the world are driving home the effects of increasingly frequent heatwaves. And companies are having to adapt to the threats posed by this extreme heat by relocating their operations, adopting new employee protections and automating more labour.
According to UN scientists, the extremes of temperature that used to be expected only once every 50 years are now likely to occur once a decade, because of global warming.
The effects on workers are already being felt. In July, as the US west coast sweltered, Amazon let the public share its office air conditioning in Seattle — but other businesses had to send workers home.
But employers, generally, are still not fully aware of the dangers, says Kathy Baughman McLeod, director of the Adrienne Arsht-Rockefeller Foundation Resilience Centre, set up by the Atlantic Council think-tank, which produced a recent study on the health and economic effects of excessive heat.
“They are under economic pressures to keep producing, and so is the worker. But it’s at everybody’s peril if they do,” she says.
Workers exposed to consistently high temperatures are at greater risk of heat stress, exhaustion and death, warns Baughman McLeod. Roughly 166,000 people died because of heatwaves in the two decades to 2017, according to the World Health Organization.
White House climate adviser Gina McCarthy labelled heat stress “a silent killer” in September, when US president Joe Biden’s administration proposed a new federal labour regulation to protect workers from the effects of extreme weather. Other jurisdictions, such as the EU, are considering similar action.
“Your whole economic model changes at a certain temperature,” says Iggy Bassi, chief executive of Cervest, a climate intelligence company, which advises companies on how to protect themselves against weather risks.
Bassi witnessed severely hot conditions first-hand when working in farming in Ghana, west Africa. “On extreme heat days, we knew ahead of time we had to change all of our labour rotas,” he says. “Beyond a certain temperature, the human body cannot work because outside humidity is so high.”
Similar changes to grape picking in European vineyards are under way, he notes, with workers resting in the hottest part of the day. Automation of tasks, such as a weeding robot developed by French company Naïo Technologies, could become more prevalent, he says.
Emerging markets with the least resilient economies are at most risk from the effects of extreme heat, Bassi adds. “I don’t think it means manufacturing is coming back [to developed countries] — it will mean accelerating automation.”
Aside from the direct consequences for physical health and cognition, climate change is an acknowledged threat multiplier, by exacerbating already precarious situations through extreme weather events that can put pressure on food supplies and even lead to political instability.
Drop in labour productivity falls when workplace temperatures increase by 1C, especially in environments above 25C
“Extreme heat and climate change alter the balance of resources in a region, alter resource scarcity and resource competition,” says David Downing, an intelligence and geopolitical risk analyst based in London. This makes banditry or terrorist groups more attractive, and increases the risks to the “state, citizens, and travellers”, with implications for businesses.
Rising heat is also likely to lead to populations trying to move to cooler areas, particularly in the developing world where climate impacts are expected to be most concentrated. “The costs of mitigation beforehand are often cheaper in the long term than post event repair,” says Downing.
Anant Sudarshan, of the University of Chicago, and co-author of a study into the economic impacts of extreme heat, says labour productivity falls by about 2 per cent when temperatures increase by 1C, especially in environments above 25C. Other studies put the drop in productivity as high as 4 per cent per 1C.
Any company with a supply chain outside the most temperate climes will feel the effect, he says: “Extreme heatwaves in Bangladesh and India might be a big problem for the garment industry in the US or UK.”
Companies can, nevertheless, mitigate disruption by making a number of adaptations. Sudarshan says employers can: review climate control, air conditioning and other elements of workplace comfort, although this can involve more electricity use; give staff longer breaks to cool down, which may mean hiring more people; increase automation to cut exposure to extreme conditions; or relocate their operations.
Sectors where staff work outside — such as agriculture, construction, utilities and tourism — are most directly exposed to the effects of heat. But even “indoor” businesses that use offices, warehouses or factories, will need better — and therefore more efficient — cooling systems, because feeling too hot slows indoor workers down and affects mental acuity and hand-eye co-ordination.
In fact, rising temperatures could drive more companies’ operations out of overheating cities, or even entire regions that are already hot, such as US states Texas and Florida — with knock-on effects on the labour market.
“Mandating more use of climate control when there are a large number of people working together may increase how comfortable they are,” says Sudarshan.
But he adds: “It doesn’t make the problem go away, because this type of regulation will also increase the costs of doing business and lead firms to think about these costs when deciding how to invest in labour versus machinery.”