The
summer
of
2023
was
the
hottest
since
records
began
in
1880,
according
to
NASA.
Globally,
scientists
estimate
global
warming
is
in
the
range
of
1.2°C
compared
with
the
pre-industrial
era.
Heatwaves
not
only
create
droughts
and
wildfires,
but
also
floods
and
tornados
that
destroy
land
and
buildings;
they
also
disrupt
infrastructure
such
as
transport
and
other
public
services.
The
frequency
of
extreme
weather
events
is
in
fact
increasing,
and
it
is
almost
certain
that
they
have
become
more
intense
and
frequent
since
the
1950s.
In
the
summer
of
2023,
three
regions
were
particularly
hit
hard:
Southern
Europe,
the
US
and
Mexico,
and
China.
This
summer
is
unlikely
to
be
unusual.
In
its
2022
report,
the Intergovernmental
Panel
on
Climate
Change
(IPCC)
identified
and
assessed
eight
key
risks
for
human
activities,
from
the
disruption
of
certain
activities
such
as
transport
systems
to
the
loss
of
livelihoods,
increased
poverty
and
hunger,
diseases,
water
scarcity
and
conflicts.
The
IPCC
has
already
confirmed that climate
change
is
related
to
human
activities.
Those
key
risks,
which
could
rise
in
the
future,
will
depend
on
the
magnitude
of
climate
change,
but
also
how
exposed
and
vulnerable
societes
are
to
those
changes.
Heatwaves
are
one
of
the
deadliest
threats
to
human
populations,
with
around
500,000
people
dying
every
year
globally
as
a
result.
There
are
direct
impacts
(heat
shocks)
and
indirect
impacts
(spread
of
diseases).
Risks
to
Workers
Heat
also
impacts
human
capital.
In
Europe,
about
23%
of
workers
were
exposed
to
high
temperatures
during
about
25%
of
their
working
time.
That
was
in
2015.
It
is
even
worse
in
specific
sectors
such
as
agriculture
or
construction
where
workers
labour
outdoors.
When
temperature
cross
a
certain
threshold,
the
probabily
of
work
accidents
increases
(5
to
7%
higher
when
temperature
is
between
30°C
and
33°C
degrees
and
10-15%
higher
when
temperature
is
above
38°C)
according
to
Eurofound,
the
EU
agency
for
improving
living
and
working
conditions.
For
an
investor,
it’s
almost
impossible
to
insulate
your
portfolio
from
those
risks
in
the
longer
term.
You
can
always
look
for
companies
that
help
mitigate
and
protect
from
the
consequences
of
heatwaves.
If
we
can’t
reduce
the
level
of
greenhouse
gas
emissions,
most
notably
carbon
dioxide
and
methane,
no
single
sector
will
escape
the
consequences
in
terms
of
access
to
resources,
whether
human
or
raw
materials.
AI
and
robots
are
far
from
being
able
to
replace
humans
for
the
most
impacted
jobs,
especially
those
that
require
manual
dexterity.
Most
Exposed
Sectors
In
a
recent
report,
ESG
analysts
at
Oddo
BHF
Securities
estimated
that
the
most
impacted
sectors
include
food,
tourism,
energy,
semiconductors,
airports
and
insurance.
The
food
industry
is
going
to
be
impacted
by
the
decline
in
biodiversity
and
the
quality
and
cost
of
its
raw
materials.
“The
difficulty
for
the
sector
is
that
the
majority
of
its
impacts
and
dependencies
are
found
upstream
of
its
value
chain,”
they
write
in
their
report.
With
tourism,
we
know
that
Southern
European
countries
might
be
more
impacted
than
others.
Yet
the
business
potentially
lost
in
those
countries
might
be
more
than
compensated
by
the
gain
of
new
business
in
North
European
countries,
including
the
UK,
Poland
and
Nordic
countries.
While
the
war
in
Ukraine
demonstrated
the
fragility
of
the
oil
and
gas
industry
to
geopolitical
risk,
climage
change
might
have
even
more
profound
consequences
for
the
energy
sector.
Droughts,
hurricanes,
cyclones
and
floodings
impact
the
production
of
energy
or
materials
used
in
their
production,
such
as
copper
or
cobalt.
They
also
affect
the
resilience
of
electricity
systems
and
the
distribution
of
energy
globally,
according
to
the
Oddo
BHF
report.
In
the
technology
sector,
both
semiconductor
and
data
centres
could
be
affected
by
the
scarcity
of
water.
Some
countries,
such
as
Taiwan,
are
heavily
reliant
on
the
availability
of
manufacturing
capacities
of
its
national
champion,
TSMC.
Higher
temperatures
might
limit
its
ability
to
raise
production
when
it
is
most
needed.
Surprisingly,
some
of
its
expansion
projects
are
located
in
regions
most
exposed
to
droughts,
such
as
Arizona
in
the
US.
Many
semiconductor
manufacturers
have
selected
Texas
to
build
new
capacities
and
are
exposing
themselves
to
the
same
kind
of
risksl.
Airlines
and
Insurance
Among
the
infrastructure
most
at
risk,
Oddo
BHF
identifies
airports
as
potentially
vulnerable
to
climate
change,
especially
floodings
and
heatwaves.
According
to
the
IPCC,
the
performance
of
planes,
the
runways,
personnel
and
buildings
are
becoming
more
fragile
during
heat
waves,
which
would
translate
into
accelerated
depreciation
of
certain
assets
and
the
need
to
invest
more
money
to
mitigate
climate
change
impact.
“The
increase
in
extreme
weather
phenomena
directly
affects
the
economic
model
of
insurers
and
reinsurers”,
explains
Oddo
BHF.
“First,
on
the
liabilities
side
of
their
balance
sheets,
the
multiplication
of
damage
caused
by
natural
disasters
inevitably
leads
to
losses
linked
to
their
coverage.
Secondly,
the
depreciation
of
portfolios,
induced
by
the
reaction
of
the
markets
in
anticipation
of
new
regulations
for
example
can
affect
the
assets
on
the
balance
sheet
of
insurers.”
Climate
change
has
not
only
driven
an
increase
in
insurance
premiums,
but
it
has
also
been
used
as
an
excuse
for
some
insurance
companies
to
reduce
the
coverage
in
their
policies.
“The
increase
in
natural
disasters
intensifies
the
societal
challenges
facing
the
sector,”
says
Oddo
BHF.
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