Deadly floods in Pakistan, record-breaking heat waves in China, famine-causing droughts in parts of Africa, and unusually hot temperatures in the U.S., Europe and Australia: The impact of human-induced climate change is being felt across the world, with experts warning that extreme weather events are no longer the exception but rather becoming the new norm.
“In an unrelenting cascade of heat waves, forest fires, flash floods, multiple glacial lake outbursts, flood events and now the monster monsoon of the decade are wreaking nonstop havoc throughout the country,” Pakistan’s Federal Minister for Climate Change Sen. Sherry Rehman said Saturday as Islamabad declared a state of emergency in response to the “serious climate catastrophe” affecting the South Asian country.
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When record-breaking heat waves cause train tracks to bend, airport runways to buckle, and roads to melt, as happened in the United Kingdom last month, it is likely that business performance will suffer.
The problem is not going away, either. Businesses will need to better manage extreme heat risk. But are investors sufficiently informed on the economic toll caused by the increasing frequency of extreme weather?
While the frequency of these events is increasing, more worrisome is that heat intensity is also increasing. Clearly, businesses are not immune to the need to adapt, though their silence might make you think otherwise.
Rising temperatures affect everything
Keeping cool, transporting goods, and scheduling flights as runways melted were just some of the challenges people and businesses have faced during the current European summer.
As it became apparent that our workplaces and infrastructure might not be able to cope with extreme heat, we also saw unions call for workers to stay home. But could workers take the day off? The U.K.’s Health and Safety Executive stated: “There is no maximum temperature for workplaces, but all workers are entitled to an environment where risks to their health and safety are properly controlled.”
Are these rules sufficient in this new normal? Some EU countries already have upper limits, but many do not. The Washington Post reported U.S. federal action might be coming due to concerns over extreme heat for workers. Mitigation of these factors will no doubt be costly.
While media reports highlight the toll on workers and businesses, there is little empirical evidence on the financial hit to business. Here is where our research comes into play: how much of an impact does extreme heat have on business profitability?
Heat hitting the bottom line
We focused on the European Union and the U.K. because the region has a diversity of climate and weather extremes. They are a major economic force, with strong policies on decarbonizing their economies, but also rely on coal, gas, and oil for many sectors.
When it’s hot, these countries are forced to burn more fossil fuel to cool overheated populations, contrary to the need and desire to do the opposite.
With detailed records on heat events at a local level, we connected weather data to a large sample of private and public companies in the EU and the U.K. We focused on two critical aspects of a firm’s financial performance around a heat spell (at least three consecutive days of excessive heat): the effect on profit margin and the impact on sales. We also examined firms’ stock performance.
We found that businesses do suffer financially, and the effects are wide ranging.
For the average business in our sample, these impacts translate into an annualized loss of sales of about 0.63% and a profit margin decrease of approximately 0.16% for a one degree increase in temperature above a critical level of about 25C.
Aggregated for all firms in our sample, U.K. and EU businesses lose almost US$614 million (NZ$975 million) in annual sales for every additional degree of excessive temperature.
Impact bigger than the data shows
We also found the intensity of a heat wave is more important than its duration.
This financial effect might sound small, but remember, this is an average effect across the EU and the U.K. The localized effect is much larger for some firms, especially those in more southern latitudes.
The stock market response to extreme heat is also muted, perhaps for the same reason. We find stock prices on average dropped by about 22 basis points in response to a heat spell.
These average annualized effects include businesses’ efforts to recoup lost sales during heat spells. They also include businesses in certain sectors and regions that appear to benefit from critically high heat spell temperatures, such as power companies and firms in northern European countries.
While we show a systematic and robust result, our evidence probably further underestimates the total effects of heat waves. That’s because businesses disclose very little about those effects due to lax disclosure rules and stock exchange regulations relating to extreme weather.
Financial data part of climate change
Without a doubt, better disclosure will help untangle these effects.
Ideally, financial data needs to be segmented by climate risk and extreme heat dimensions so investors are better able to price the risk. Regulators need to pay attention here. Investors must be able to price material risk from extreme weather.
A good example is New Zealand, which is about to mandate climate risk disclosures with reporting periods starting in 2023. Such mandates recognize that poor disclosure of climate risk is endemic, and we don’t have the luxury of time.
For those businesses negatively affected, disclosing the number and cost of lost hours and the location of the damage would be helpful. However, it is not yet clear if climate disclosure standards effectively capture these risks, as companies have significant discretion about what to disclose.
It is not necessarily all about cost—some sectors might even benefit. While power companies, for example, might report increased sales from increased energy consumption, they are also constrained by the grid and the increased cost of production.
And our evidence suggests there is little overall benefit to the energy sector. This doesn’t rule out some windfall profits, so we need to understand more about both the positive and negative effects on each industry.
Finally, this July saw temperatures in the United Kingdom soar to 20C above normal. Can businesses cope? Next time you feel the heat, pause to ask if this is also hitting the bottom line of your workplace or investment portfolio.
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Business can no longer ignore extreme heat events. It’s becoming a danger to the bottom line (2022, August 5)
retrieved 5 August 2022
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Proof of immunization against COVID-19 is no longer required to access restaurants, theatres and indoor events in B.C. as the province lifts its vaccine card rules.
As of 12:01 a.m. Friday, the B.C. Vaccine Card, which has been in use since September, is no longer necessary unless an individual business chooses to keep using it. Proof of immunization is still required for federally regulated travel, like on airplanes, however.
Other provinces ended their vaccine card programs much earlier than B.C. Ontario lifted its requirement in early March while Alberta lifted its passport in February. Quebec’s vaccine passport, which was more strict than B.C.’s and was used to access box stores and liquor shops, was phased out in mid-March.
But earlier this week, B.C. health officials confirmed the end of the vaccine card program locally.
Dr. Bonnie Henry also gave a modelling presentation that suggested there has been a slight increase in COVID-19 cases, as tracked by wastewater testing in the Lower Mainland.
With increases in activity, more travel and a slightly more transmissible variant, Henry said Tuesday officials “know we are likely to see a slight increase over time in the next month to two months and then a gradual decreasing again.”
Even so, Henry said some measure are “no longer necessary all the time,” including the vaccine card, which she said “was very effective at supporting people to get vaccinated.”
Infectious disease expert Dr. Brian Conway agrees.
“You really do need three shots to protect against the Omicron variants. So the meaningfulness of the vaccine passport has decreased. It’s served its purpose now. Let’s move on and deal with endemic COVID,” Conway said.
But Conway stressed the pandemic is not over and said now is the time for British Columbians to take individual responsibility.
“We live in a COVID world,” he said.
“Get your shots, if you haven’t gotten all of the shots to which you are entitled. Stay home if you’re sick, keep washing your hands, have a mask on your person to use strategically. Mask mandates have transformed into mask etiquette. Let’s learn that etiquette and these should be our priorities.”
Businesses have been preparing for the end of vaccine card requirements, with some choosing to put other safety measures back in place.
“There’ll be enhanced cleaning, sanitizers. A lot of restaurants probably won’t go back to menus. It will be QR codes, much more emphasis on patios,” said Ian Tostenson with the B.C. Restaurant and Food Services Association.
With more than 90 per cent of eligible British Columbians vaccinated against COVID-19, Tostenson said each person would have to assess their own risk, adding it was Dr. Bonnie Henry and not the association that pushed for the change.
“The chances of you being in a restaurant with an unvaccinated person are pretty small in British Columbia,” he said.
The vaccine passport program was designed to safely ease restrictions on gatherings events and encourage people to get vaccinated.
“It gave the public a sense of competence where we had it while we caught up to those high vaccination rates,” Tostenson said.
He said he hasn’t heard of any restaurants that will continue to ask for it, but it’s still a possibility.
“There might be a little community somewhere where they know their customers, and they would like to have that,” he said.
“But I think by and large, the public understands that with or without the vaccination card, it’s not going to change the safety in a restaurant.”
Proof of vaccination is still required to visit those in long-term care and assisted living facilities in B.C.
With files from CTV News Vancouver’s Bhinder Sajan
BOSTON, Mass. — In recent years, Boston Police have had a lot of experience controlling massive crowds when things quickly change.
In many cases, BPD depends on its law enforcement partners for help.
But last year, the Boston City Council enacted an ordinance restricting police use of non lethal force, such as pepper spray and rubber bullets.
And now one of BPDs major law enforcement partners, METROLEC, is saying it can no longer send its officers to Boston to help with planned events.
“We just simply could not send our officers into that situation, it’s just a catch 22 frankly,” said current METROLEC President, Westwood Police Chief Jeffrey Silva.
METROLEC stands for Metropolitan Law Enforcement Council and it is made up of 48 Massachusetts police and sheriffs departments that pool their resources in times of emergency.
Boston is not a member of METROLEC, but BPD and METROLEC frequently share resources when requested.
Chief Silva tells me, METROLEC’s officers are well trained in the use of non lethal tactics.
But he says the rule change makes things impossible for METROLEC officers in Boston.
“These situations are dynamic. They change in an instant. And so officers need to have available to them, the various tools they need to deal with it. So, to come up with a bright line rule, saying officers can’t act in a certain way consistent with their training, consistent with their policy is very problematic for the officer, it’s something we can’t effectively manage,” Silva said.
Former Boston Police Chief Dan Linskey is concerned what all this means, for crowd control in Boston.
“This is scary that Boston is losing these resources that have been vital in keeping our community safe,” Linskey said. “If outside agencies have decided they are not going to send those trained, equipped resources, Boston is going to need to find them somewhere. Because it wasn’t like they were overkill. They were absolutely needed.”
