--- description: The office air conditioning can feel like a refuge from the extremes outside, but it may be time for businesses to start feeling the heat. title: Extreme Heat Is Hitting Companies Where It Hurts image: https://static.time.com/v3/assets/bltea6093859af6183b/blt044bd1629598a769/698a3eabcabb1d2046e5190c/worker-heat-wave-corporate-climate-impact.jpg?branch=production&width=2400&quality=75&auto=webp&crop=16:9 ---  * [Climate](/section/climate/) ## Climate Update your preferences in [Account Settings](/account/preferences/) Close * [Leadership Report](/tag/co2-leadership-report/) ## Leadership Report Update your preferences in [Account Settings](/account/preferences/) Close # Extreme Heat Is Hitting Companies Where It Hurts  by [Justin Worland](/author/justin-worland/)  ## Justin Worland Update your preferences in [Account Settings](/account/preferences/) Close Senior Correspondent Jul 13, 2023 4:34 PM CUT  A Boeing employee stands in the shade during the UK heat wave 18th July 18 2022, at Farnborough, England. A Boeing employee stands in the shade during the UK heat wave 18th July 18 2022, at Farnborough, England.Richard Baker / In Pictures—Getty Images  by [Justin Worland](/author/justin-worland/)  ## Justin Worland Update your preferences in [Account Settings](/account/preferences/) Close Senior Correspondent Jul 13, 2023 4:34 PM CUT (_To get this story in your inbox, subscribe to the TIME CO2 Leadership Report newsletter_ [_here_](https://www.time.com/co2-newsletter "undefined")_._) It’s hot out there and getting hotter. The last few weeks have brought some of the highest temperatures on record at great cost to [human health](https://time.com/6294155/heat-stroke-risks/ "undefined") and [wellbeing](https://time.com/6280073/how-heatwaves-impact-your-brain/ "undefined"). For a moment, the office air conditioning can feel like a refuge from the extremes outside, but it may be time for businesses to start feeling the heat. At the heart of the issue is what climate experts call “physical risk.” This term is somewhat self explanatory. The physical effects of climate change pose a physical risk to businesses’ assets and operations—think of hurricanes, wildfires, and flooding, to name a few. These extreme weather events are financially material, and [hurt the bottom line](https://time.com/6093845/how-heat-hurts-the-economy/ "undefined"). A [2021 report](https://impaxam.com/assets/pdfs/thought-leadership/physical-climate-risk-and-the-sp-500.pdf?pwm=5933 "undefined") from Impax Asset Management Group found that two-thirds of large companies globally have at least one asset highly exposed to the physical risk of [climate change](https://time.com/section/climate/ "undefined"); it’s likely the share of at-risk companies has grown since then. **Read more:** [_Human Adaptation to Heat Can’t Keep Up With Human-Caused Climate Change_](https://time.com/6292615/human-adaptation-to-heat-climate-change/ "undefined") --- ### More from TIME --- “This is actually going to touch every sector,” Brian Deese, recently President Biden’s top economic advisor, told me in 2020 when he was the global head of sustainable investing at Blackrock. “Those risks, while they do accelerate out into the future, are more pressing on the market today than most market participants understand.” Phenomena like fires and floods may be the most obvious example of physical risk, but heat falls into the same bucket. Indeed, a 2021 [Moody’s report](https://assets.website-files.com/5df9172583d7eec04960799a/618872a58d35f2643cbcaef2%5FBX9770%5FESG%5FCritical%20industries%20have%20substantial%20exposure%5F7Nov2021.pdf "undefined") identified heat stress as one of two physical risks that affect almost every sector. In agriculture, heat can kill crops. That harms retailers, too, who are dependent on crops in their [supply chain](https://time.com/6227222/climate-change-impacting-global-dairy-supply/ "undefined"). For the travel industry, extreme heat can shift consumer demand—making some destinations desirable and others anathema. Across many sectors, heat stress makes it more difficult—and at times impossible—for [employees to work outside](https://time.com/6292244/ups-strike-climate-change/ "undefined"). --- [**_Are you working outside in a heat wave? Tell us about it_**](http://time.com/extreme-heat "undefined")**_._** A quick look at financial disclosures shows many big companies are already noting heat as a material financial risk to their operations. [Walmart](https://s201.q4cdn.com/262069030/files/doc%5Ffinancials/2023/ar/Walmart-10K-Reports-Optimized.pdf "undefined"), for example, says the company is vulnerable to rising costs of cooling its massive facilities; [Disney](https://thewaltdisneycompany.com/app/uploads/2023/02/2022-Annual-Report.pdf "undefined") says excessive heat may affect demand for its tourism products. **Read more:** [_Why Extreme Heat Is So Bad for the Human Body_](https://time.com/6202849/extreme-heat-health-risks/ "undefined") And, if the direct impact on individual businesses weren’t enough, there’s also a macro effect to consider: a significant body of research now shows that extreme heat is a drag on the global economy. A [study](https://www.science.org/doi/10.1126/sciadv.add3726 "undefined") published in the journal _Science Advances_ found that human-caused extreme heat cost the global economy as much as $29 trillion between 1992 and 2013\. A different [study](https://impactlab.org/research/global-non-linear-effect-of-temperature-on-economic-production/ "undefined") from the Climate Impact Lab found that higher temperatures could reduce the average income globally by nearly a quarter by 2100 compared to a no-climate-change scenario. Where does this all leave companies? Those with adequate resources are building programs to address heat risk. Walmart, for example, is assessing its supply chain to ensure it can bounce back from extreme weather—including heat stress—as part of a comprehensive climate program. Beyond the week-to-week, month-to-month impact of heat, it’s also important to consider the role businesses can play in avoiding the worst possible heat. By cutting their own carbon emissions—and pushing a bigger societal shift toward a low-carbon economy—companies not only protect their own growth prospects but also the wellbeing of all of society. ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/6294411/extreme-heat-impacting-companies-economy/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/6294411/extreme-heat-impacting-companies-economy/"},"headline":"Extreme Heat Is Hitting Companies Where It Hurts","datePublished":"2023-07-13T16:34:06.000Z","dateModified":"2026-02-24T16:09:15.268Z","description":"The office air conditioning can feel like a refuge from the extremes outside, but it may be time for businesses to start feeling the heat.","url":"https://time.com/6294411/extreme-heat-impacting-companies-economy/","keywords":["Leadership Report","climate change","healthscienceclimate","sponsorshipblock"],"thumbnailUrl":"https://static.time.com/v3/assets/bltea6093859af6183b/blt044bd1629598a769/698a3eabcabb1d2046e5190c/worker-heat-wave-corporate-climate-impact.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","author":[{"@type":"Person","name":"Justin Worland","jobTitle":"Senior Correspondent","url":"https://time.com/author/justin-worland/"}],"articleSection":"Climate","image":[{"@type":"ImageObject","url":"https://static.time.com/v3/assets/bltea6093859af6183b/blt044bd1629598a769/698a3eabcabb1d2046e5190c/worker-heat-wave-corporate-climate-impact.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","width":1200,"height":675,"headline":"Boeing Worker At Farnborough Airshow","caption":"A Boeing employee stands in the shade during the UK heat wave 18th July 18 2022, at Farnborough, England.","creditText":"Richard Baker / In Pictures—Getty Images","representativeOfPage":true}],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"/section/climate/","name":"Climate"}},{"@type":"ListItem","position":2,"item":{"@id":"/tag/co2-leadership-report/","name":"Leadership Report"}},{"@type":"ListItem","position":3,"item":{"@id":"https://time.com/6294411/extreme-heat-impacting-companies-economy/","name":"Extreme Heat Is Hitting Companies Where It Hurts"}}]},{"@context":"https://schema.org","@type":"VideoObject","name":"The Future of Workplace Wellness and Prioritizing Mental Health","description":"TIME interviews LinkedIn CEO Ryan Roslansky, Future Forum Vice President and Co-founder Sheela Subramanian and Guild CEO Rachel Romer Carlson on the importance of prioritizing mental health in the workplace.","thumbnailUrl":"https://cdn.jwplayer.com/v2/media/JNDyTl2n/poster.jpg?width=720","uploadDate":"2022-05-26T15:44:00.000Z","contentUrl":"https://cdn.jwplayer.com/manifests/JNDyTl2n.m3u8","embedUrl":"https://time.com/6294411/extreme-heat-impacting-companies-economy/","duration":"PT1M52S","potentialAction":{"@type":"SeekToAction","target":"https://time.com/6294411/extreme-heat-impacting-companies-economy/?jw_start={seek_to_second_number}","startOffset-input":"required name=seek_to_second_number"}},{"@context":"https://schema.org","@type":"VideoObject","name":"Are You Working Outside in a Heatwave? 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