Heat stress summer 2022 - a reality check

ESG+ Matters

Heat stress summer 2022 - a reality check

Eileen Gavin - 25 July 2022

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As the UK recorded its hottest days ever and the public was advised not to travel amid the country’s first ever extreme heat warning, the High Court on 18 July found the British government’s Net Zero Strategy in breach of the 2008 Climate Change Act (CCA). 

In a case taken by Friends of the Earth, ClientEarth and the Good Law Project, the judge ruled that Net Zero Strategy, which sets out plans to decarbonise the economy, did not meet the government’s obligations under the CCA to produce detailed climate policies that show how the UK’s legally-binding carbon budgets will be met.

The Westminster government - currently rudderless pending the Conservative Party election of a new PM to replace the outgoing Boris Johnson - will have to update its climate strategy to include a quantified account of how its policies will achieve climate targets, based on a realistic assessment of what it actually expects them to deliver, according to Friends of the Earth. Moreover, and unlike the first time round, the updated strategy will have to be presented to parliament for scrutiny by April 2023.

The amended plan must include ‘sound policies’ that stand up to the scrutiny of the Climate Change Committee (CCC), which has found that credible plans exist for just two-fifths of the government’s required emissions reductions.

Friends of the Earth lawyer Katie de Kauwe hailed the ruling as a landmark victory for climate justice and government transparency. “It shows that the Climate Change Act is a piece of legislation which has teeth, and can, if necessary, be enforced through our court system if the government does not comply with its legal duties”, she noted. 

2022 - a glimpse of 2050?

A year ago, in May 2021, Liz Hypes, Senior Analyst on our Climate and Resilience Team, examined the impacts of intensifying heat stress on global cities. Her insight was all too prescient.

By 2050, Hypes noted, extreme heat stress is projected to impact 350 million people in the world's megacities. Major metropolitan areas like London and NYC will have to face up to rising health crises as heat waves become commonplace. The burden will be significant: healthcare facilities will become stressed, transport and power grids will face disruption, and GDP will be affected as productivity and output falls.

But as is now glaringly evident across the UK, Western Europe and beyond, global heating is already forcing us to re-evaluate how we live and work in our urban environments.

Our Climate and Resilience Team report that intensifying levels of heat stress over the next 30 years will make Glasgow as warm as London. While Glaswegians may welcome the change from iron grey skies and rain, those familiar with London’s stifling Underground system will not relish the thought of heat in the UK capital feeling more like Milan does today. 

Milan’s July average high temperature comes in around 30⁰C, 11 degrees warmer than London’s current average, elevating the frequency and length of rail delays as more days climb over 24⁰C. Yet London’s transition into a climate like Milan’s equates to more than just a sweaty commute. As heatwaves like London’s 2019, 2020 and 2022 events become the norm by 2050, the city could see losses upwards of USD2.8 billion in productivity – from increased labour inefficiency, illness and workplace injuries and delays due to impacts on transport – despite its workforce being largely staffed by people in climate-controlled offices. 

Further south, pressures on power and water supplies, excess mortalities and labour capacity losses are already shared across Southern European cities like Lisbon, Bologna and Athens. But in the period to 2050, they will, on average, transition into feeling more like Middle Eastern and North African cities over 400 miles to their south, where fatalities related to heat stress are most concentrated. It is going to be an uncomfortable journey and one operators, investors, and city authorities need to start preparing for now.  

Across the Atlantic, the situation is similarly worrying. The summer of 2020 saw US cities reaching record monthly temperatures and humidity, but this will feel like the new norm by mid-century. The increase in heat stress will pose particular risks for the US’s nearly 8 million construction workers and 13 million manufacturing employees.  

In a 2018 climate lawsuit against fossil fuel companies, NYC stated that hotter summers even by 2020 could result in an additional 260 heat-related deaths each year and that it was spending over USD100 million on a programme to protect vulnerable communities from extreme heat. These expenditures will grow hugely in coming decades, with the costs of heat resilience strategies and fluctuating energy demands being passed on to real asset owners and businesses.  

Houston by 2050 will feel more like Culiacán, Mexico, over 800 miles southwest. Houston’s oil & gas sector could be left in the shade as reduced productivity starts to bite. Around 7.4 million barrels of crude oil are produced per day in Texas and the Gulf of Mexico, but Houston faces large labour capacity losses as its heat stress days increase by 50% annually to nearly 150 by mid-century. This could translate into price rises if production costs climb or product availability falls.  

The high exposure of cities in the US Sunbelt and the negative impacts on its main economic sectors, such as agriculture, tourism and the growing manufacturing sector, is a significant concern to real asset managers and investors, as well as governments. 

Litigation will be the default position if governments and companies fail to act

Asset owners, especially those involved in real estate, will see operational and retrofitting costs soar as cooling demands increase and buildings require better heat resilience. And corporate supply chains should expect commodity price increases, falling labour productivity and growing labour rights risks in warmer months.

The key word for cities, asset owners and corporates alike is resilience, Hypes emphasises. It must now be front of mind in climate strategies and investment decisions.

Failing to adapt to global warming will not only be deadly but also devastating – it will scorch economies, inflate inequalities, drive migration, and amplify natural hazard risks already damaging key urban economies.

And, as the latest UK ruling demonstrates, it will also drive climate litigation – against governments, companies and their investors and financial backers.

Eileen Gavin

Principal Analyst, Global Markets & Americas

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