--- title: El Niño Will Cause Disruption to Businesses Across the Globe description: Meteorologists say that this El Niño may be the most severe in history. Previous instances of the climate phenomenon have caused billions in damage. canonical: https://time.com/article/2026/08/21/el-nino-economic-business-disruption/ author: Justin Worland article:opinion: false article:content_tier: free article:published_time: 2026-08-21T20:14:56.252Z article:modified_time: 2026-08-21T20:14:56.863Z article:section: Climate og:title: Companies Are Bracing Themselves For El Niño’s Ripple Effects og:description: Meteorologists say that this El Niño may be the most severe in history. Previous instances of the climate phenomenon have caused billions in damage. og:url: https://time.com/article/2026/08/21/el-nino-economic-business-disruption/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt2aff299b173b3f3a/6a88acd4e14b97c4b21cdaf6/Phillippines_El_Nino.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 og:image:width: 1200 og:image:height: 675 og:image:alt: Phillippines El Nino.jpg og:type: article twitter:card: summary_large_image twitter:title: Companies Are Bracing Themselves For El Niño’s Ripple Effects twitter:description: Meteorologists say that this El Niño may be the most severe in history. Previous instances of the climate phenomenon have caused billions in damage. twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt2aff299b173b3f3a/6a88acd4e14b97c4b21cdaf6/Phillippines_El_Nino.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 ---  # Companies Are Bracing Themselves For El Niño’s Ripple Effects  by [Justin Worland](https://time.com/author/justin-worland/)  ## Justin Worland Senior Correspondent Aug 21, 2026 8:14 PM UTC  People wade through a flooded road caused by monsoon rains, in Apalit, Pampanga, Philippines, on Aug. 20. People wade through a flooded road caused by monsoon rains, in Apalit, Pampanga, Philippines, on Aug. 20.Daniel Ceng/Anadolu—Getty Images  by [Justin Worland](https://time.com/author/justin-worland/)  ## Justin Worland Senior Correspondent Aug 21, 2026 8:14 PM UTC The warnings from meteorologists have been growing slowly but steadily in recent months: [the most severe El Niño](https://time.com/article/2026/04/10/super-el-nino-2026-what-to-know/) on record may be coming soon. Record-breaking temperatures and a slew of extreme weather events are likely to follow. For companies and investors, alarm bells are already sounding. Hundreds of publicly traded companies—particularly in the food and chemicals sectors—have used earnings calls in recent months to[ outline](https://www.reuters.com/legal/litigation/corporate-concern-over-el-nino-hits-multi-year-high-2026-08-14/) their contingency planning. And banks have [warned](https://www.dbresearch.com/PROD/IE-PROD/PDFVIEWER.calias?pdfViewerPdfUrl=PROD0000000000633932&rwnode=REPORT) about the possibility of a supply shock that drives up prices as [extreme weather](https://time.com/7323198/companies-climate-cost-risk-adaptation/) disrupts production chains. In other words, the potential effects of [El Niño](https://time.com/6263513/el-nino-may-test-understanding-climate-change/) over the coming year are both local and specific to companies and their operations, and cumulative across the economy. Unlike many phenomena in our climate-changed world, El Niño isn’t new or unfamiliar to most decision makers. Past cycles in the 1970s and 1990s have wrought enough damage that supply chain planners know to watch out. But this El Niño will inevitably be different. For one, it’s happening against the backdrop of a world that has [already warmed](https://www.bbc.co.uk/news/articles/cd7575x8yq5o) roughly 1.5°C since the Industrial Revolution. And, second, modelers have observed an especially significant difference between recent sea-surface temperatures and the historical averages, an indicator of an especially strong El Niño. A typical El Niño cycle lasts less than a year, but the economic effects may extend far longer. An initial shock of crops destroyed by heavy rain, for example, would harm farm economies immediately while disrupting global supplies for several seasons. A [report](https://www.ecb.europa.eu/press/economic-bulletin/focus/2023/html/ecb.ebbox202306%5F01~36e78cc75e.en.html) from the European Central Bank found that a strong El Niño could raise global food commodity prices by as much as 9% within 16 months of onset and last for years longer. Factory flooding wouldn’t just create immediate disaster relief challenges but take years to rebuild. “When we think about pricing and when we think about other actions to protect our margins, we don’t look at it specific to weather patterns,” saysRichard Shin, CFO at the Philippines-based fast food chain company Jollibee Group, on an earnings call. “We look at it right across the board, what we call inflation and what we call supply chain disruptions or limitations.” All told, the economic hit could be enormous. A [2023 paper](https://www.science.org/doi/10.1126/science.adf2983) published in the journal _Science_ found that the 1982-1983 El Niño drove more than $4 trillion in global income losses. In the 1997-98 cycle, that total hit $5.7 trillion. With El Niño, as with climate change, the relationship between a stronger phenomenon and economic damages isn’t linear. A worse El Niño may lead to much, much worse economic outcomes. 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