Too hot to handle: How extreme heat damages businesses' bottom lines

Extreme heat is reshaping daily life, but what does it mean for companies? Assistant Professor Nora Pankratz joined the Executive Summary to unpack the financial toll of rising temperatures on organizations, and what — if anything— companies can do about it.

Show notes

[0:00] The world is getting warmer, and it’s costing businesses.

[0:37] Meet Nora Pankratz, an assistant professor at the University of Toronto Mississauga, with a cross appointment to the Rotman School of Management. She studies the impact of climate change on organizations.

[1:48] One of the biggest risks of heat is its impact on production.

[3:06] What does “heat exposure” even mean?

[3:32] Heat – specifically days over 30 degrees Celsius – might be costing businesses an average of $650,000 per quarter.

[3:54] And it affects indoor and outdoor industries alike, albeit in slightly different ways.

[4:49] It also has an impact on investors…

[5:39] …and supplier relationships.

[7:39] How can businesses adapt?

[8:40] Importantly, no one can really study what businesses are doing, since they aren’t sharing, nor are they required to share, their heat mitigation strategies. As a result, we don’t know what works, and what doesn’t.

[9:17] Nora studied the impact of heat on worker safety, and the results weren’t great.

[10:38] What’s driving heat-related injuries?

[11:39] But a simple, low-cost heat-mitigation strategy – training to identify signs of heat stroke – had a huge impact.

[12:35] So are businesses doing anything? Well…maybe?

[13:46] Nora is hopeful: “Overall, I think over the last couple of years, there has been an uptake in this type of data and analytical work at the firm level. So, I think firms will explore this more and more going forward.”