6 Industries Heavily Impacted by Climate Change

Extreme weather events, including droughts, floods, hurricanes, and heatwaves, are becoming more common and intense due to climate change. These events can cause significant economic damage, particularly to certain industries.

Biến đổi khí hậu

Investment Trends in 2024: Navigating a Dynamic Landscape

The world is witnessing a dramatic shift in climate patterns, with far-reaching consequences for the global economy. Recognizing this, investors are increasingly paying attention to the impact of weather on industries and future business investment trends.

According to the United Nations, “extreme weather events are expected to continue to increase globally and may last for a very long time.” This is evident in the direct impacts that extreme weather has had on the operations of companies such as:

  • Suncorp Group Ltd. insurance company: Suncorp’s stock price has plummeted due to the impact of wildfires and floods caused by climate change.

  • Carnival Corp. cruise company: Ocean tourism has been disrupted by hurricanes and changes in ocean currents.

In addition to these two examples, many other businesses are and will be directly impacted by climate change. Climate risk is seen as a “latent threat” that could “upend the plans of investors around the world” (according to Akshay Panth, investment director of the Neev Fund).

Recognizing the challenges and potential opportunities, global investors are increasingly shifting towards investment areas that can adapt to climate change. To make informed investment decisions, they need to be equipped with accurate weather data and timely disaster warnings.

The current investment business trend requires flexibility, adaptability, and foresight from investors. By understanding weather changes and investing in potential sectors, they can not only generate profits but also contribute to addressing global challenges.

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Investors Increasingly Concerned About Weather’s Impact on Global Economy

Top 6 Investment Sectors Heavily Impacted by Extreme Weather

As climate change intensifies and extreme weather events become more frequent and severe, their impact on various industries is becoming increasingly evident. Investors need to carefully consider these risks and opportunities when making investment decisions. Here are the top 6 investment sectors that are particularly susceptible to the effects of extreme weather:

1. Renewable Energy: A Sector Poised for Significant Growth and Investment

Amidst growing concerns about climate change and the depletion of finite fossil fuels, renewable energy sources have emerged as a beacon of hope for a sustainable future. Unlike traditional fossil fuels that release harmful pollutants into the environment, renewable energy harnesses the power of nature’s abundant and continuously replenishing resources, such as sunlight, wind, water, and geothermal heat.

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2. Insurance Industry: Facing Both Short-Term Impacts and Long-Term Opportunities in a Changing Climate

Climate change presents a significant challenge to the insurance industry, but it also offers opportunities for innovation and growth. Insurance companies need to develop appropriate strategies to respond to climate change, both ensuring business profitability and contributing to protecting the community from the risks caused by climate change.

3. Airlines and Tourism: Facing Direct Impacts from Climate Change

The profitability of the airline and tourism industries is projected to decline over time, driven by a combination of rising fuel costs and the increasingly volatile impacts of climate change. These factors are introducing unforeseen and unpredictable expenses, putting pressure on the bottom lines of these industries.

The recent decline in stock prices for major airline and tourism companies, such as Walt Disney Co., Universal Orlando Resort of Comcast Corp., and SeaWorld Entertainment, reflects investor concerns about the industry’s ability to navigate these challenges.

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4. Mining and Natural Gas Extraction: Facing Climate Change Impacts and Opportunities

As climate change intensifies, the mining and natural gas industries face an increasingly complex and uncertain future. The frequency and severity of extreme weather events are expected to increase, leading to more frequent disruptions and higher costs. Rising sea levels pose a threat to coastal mining operations and infrastructure. And shifting weather patterns could make it more difficult to access and extract resources.

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5. Agriculture: Bearing the Brunt of Climate Change

Investors should also have long-term plans when investing in the agricultural sector. According to JPMorgan, forecasts for the El Niño phenomenon to return to Southeast Asia in late 2023 will have a significant impact on agricultural output, farms, industrial production, and investor sentiment.
Not only in Southeast Asia, India is also facing a record heatwave, causing milk production to decline in the world’s largest milk-producing country. The number of cattle dying from skin diseases has increased sharply. However, strong demand for milk in the summer has pushed up the share prices of dairy companies such as Parag Milk Foods Ltd. and Heritage Foods Ltd.
Meanwhile, coffee prices in Vietnam and Indonesia are also rising due to increasingly harsh weather conditions. The situation is similar in the sugarcane industry in India and Brazil.
From an investor’s perspective, weather has a significant impact on the agricultural sector. Investors need to constantly update technology and weather information to find effective solutions.

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6. The chemical and transportation industries face many challenges.

The chemical and transportation industries are both heavily impacted by weather. In Germany, for example, 80% of all goods are transported by water. This means that if the weather affects the water level of rivers to vary irregularly or decrease significantly, river transportation will certainly face serious difficulties. According to a recent report, Germany and the Netherlands have had to reduce their normal freight transportation activities due to weather problems and high energy costs.
Rising energy prices will also have a negative impact on the industrial and chemical industries. Therefore, investors need to carefully consider investments in these two industries to deal with future risks.

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