While reading the Financial Times top news online on a hot summer day of July in Limassol, Cyprus, I stumbled across a quite peculiar yet profoundly interesting and relevant article by author Leo Lewis (Lewis, 2024), who was outlining a new kind of exponentially growing threat to people’s financial stress levels in the modern world. The term used? “Heatflation”.
Although many might have heard of “Heatflation” before (it is no new discovery), for the simple layman it is best described as “the phenomenon of rising food prices caused by extreme heat levels. Heatwaves are damaging and destroying crops around the world, and as the supply of food dwindles, prices begin to climb. This is a major threat to food security, especially for the most vulnerable populations of the world.” (World Economic Forum, 2024).
Many might have already had an idea or two about the seriousness of this phenomenon’s effects in recent years. Indeed, climate change and global warming are vastly affecting agricultural supply levels and procedures, with producers continuously being forced to pass on increased costs to consumers due to “Heatflation”. A vast range of primary products such as maze, soyabeans, wheat, rice and even peanuts are being affected.
Shifting the discussion to the old continent, a report from the World Meteorological Organization and Copernicus, the EU climate agency, demonstrates that today’s “Europe is the fastest-warming continent on the planet, with temperatures rising at roughly twice the global average” (Eastlake, 2024). Just exactly how warm is this? A simple example is Italy recently taking the blow in wheat and rice production with a shortage of approximately 30% from expected supply levels, due to experiencing its most extreme drought in over 70 years.
What was most intriguing about Lewis’ article, however, was not how “Heatflation” finds its routes from the difficulties in meeting primary product supply lines. Nor the treacherous heat challenges which countries like Italy are experiencing in their wheat production. It was rather his evident approach on how “Heatflation” has nowadays taken new turns and pathways to affecting people’s lives, by driving manufacturing/secondary goods production costs upwards, and sometimes even affecting the service sectors of economies. Increased costs due to climatic changes which employers and business owners can either choose to absorb or pass on.
It is very much possible that just as with primary products, these costs will to a large extent be passed on to the average consumer with price increases in the near future, affecting a series of economies already prone and sensitive to inflationary shocks. Just a look at all financial (amongst other) consequences Europe has been facing in recent years, due to events such as the Russo-Ukrainian conflict and wars in the Middle East, demonstrate that the resilience of European economies has already suffered significant hits, probably some too many.
If someone reading this is now wondering how the manufacturing and services industry costs could possibly be affected by heat and climatic changes, it’s best to take a look to the East for references. Lewis highlights a simple case study from Tokyo, Japan, where a Heat Solution expo was held for the 10th year in July 2024.
Facing serious heatwaves during the summertime as a result of climate change, Japan is currently one of the leaders in the “palliative”, as opposed to the traditional “preventative” approach to tackling the “upcoming” effects of global warming, which seem to be upcoming no more, as they have already arrived and are here to stay. Due to a concerningly increasing unrest caused by employees as a result of unbearable heat in professional environments in recent years, expos such as the one in Tokyo aim at promoting tools and gadgets for helping business owners adapt and tackle the effects of rising heat levels in the workplace (such as factories and warehouses, but also in service sector offices). The target is to improve the well-being of their working staff and the flow of production procedures. Such tools and gadgets include self-cooling work vests, bottom-chilling office chairs, hydrating ice slurries and interior mist-emitters, amongst many others.
Whereas such tools would previously be considered a luxury, even non-existent, in today’s world they are being dealt with as necessities to be provided by employers to employees. A significant increase in production and administrative costs, as well as an additional sacrifice by ethical employers (mainly of small and medium-sized firms) for maintaining productivity and employee satisfaction and loyalty, as they cannot often afford to lose their strongest assets. Attending the expo, as per Lewis, was one of the most famous brands supplying such products in Japan, namely Yamashin Seikyo, which claimed that “ever more dangerous summer heat will force companies to change the way they cool factory staff — from expensive and not necessarily effective air conditioning to individual, clothing-based solutions.” A factory owner of Nagoya on the scene reportedly acknowledged the need to supply their employees with cooling equipment products worth of $800 per employee. And whereas the mathematics for such extra burden would prove repulsive, his dedication to do what is best for his business had left him with no other option.
Today, we are experiencing an era of necessary corporate mitigation. Just as with digital changes and adaptations which businesses need to perform to survive, it is not a hyperbole to suggest that sometime in the very near future, the issue of heat mitigation will be of equal importance. Only one thing is for sure: that one of the few ancient concepts which survive in our modern world is the “survival of the fittest”, implying adaptation and flexibility to welcoming change. This is a natural process which takes no prisoners. Just like old times, only the businesses able to mitigate their operations, or at least engage in an effort to adapt their practices to fit the new world status, will be the ones to keep their chances of survival alive.
Bibliography:
Eastlake, D. (2024, May). Food Navigator Europe. Retrieved from Food Navigator Europe: https://www.foodnavigator.com/Article/2024/05/08/Heatflation-What-is-it-and-how-is-it-impacting-the-food-industry
Lewis, L. (2024, July). Financial Times. Retrieved from Financial Times: https://www.ft.com/content/23f5b929-2952-41ad-8633-69da603611ab
World Economic Forum. (2024, July). Retrieved from World Economic Forum: https://www.weforum.org/videos/what-is-heatflation/
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