by Sabrina-Janna Zeyher, CFA, Investment Strategist, HSBC Global Private Banking and Wealth
Aug 16, 2022
- Frequency and magnitude of extreme weather events have been rising as the planet warms. This year record-breaking temperatures and extended periods of heat and wildfires are being experienced across the globe, leading to biodiversity loss, health issues (even death) and additional air pollution
- Working in extremely hot conditions weighs on labour productivity, increases the risk of injury and may even result in heat-related illness. The rising loss of global working hours due to heat stress is estimated to translate into an accumulated financial loss of USD2.4 trillion for the global economy by 2030, according to the International Labour Organisation (2019)
- Heat stress in the workplace also requires businesses to adjust operations to adapt to hotter working conditions and to ensure appropriate health and safety standards. Solutions cover both adaptation policies to protect the workforce and mitigation strategies to limit further climate warming. Regulatory actions for heat stress prevention plans and provisions of shade, rest break, fresh drinking water and cooling air ventilation, are expected to pick up as the global temperature rises
- Demand for air conditioning and electric fans is expected to surge due to rising temperatures. Given the polluting nature of this industry, there is a need to provide cool space in a sustainable way, focusing on technologies for renewable energy generation, storage and energy efficiency as outlined in our high-conviction theme “Energy Transition”
- Enhanced sustainability disclosure standards, such as the EU Sustainability Reporting Standards, will also enable investors to better understand heat stress as a factor of labour conditions along the global value chain when making environmental, social and governance (ESG) assessments of their investment portfolios
- Heat stress is accentuating pre-existing vulnerabilities of certain groups of society, bringing wider social issues into focus, which underpins our investment narrative of our high conviction theme “The rise of S in ESG”