Weather the Storm: Sectors Set to Thrive Amidst Growing Climate Volatility
What is driving bigger and more frequent storms?
What does a greater frequency of hurricanes mean for investors?
With cleanup from hurricane Helene still underway, hurricane Milton made landfall on Wednesday as a category 3 storm. The increasing frequency and intensity of these storms is not a one-off. Rising global temperatures, result in higher ocean temperatures which contribute to bigger storms more often. The impacts of a more active hurricane season in the U.S. will be felt in the coming years.
Storm Surge
Concentrating on Atlantic hurricane season, forecasters had predicted a busy one with 17 to 25 named storms for 2024. While we may not reach the upper level of that range (there have been 13 named storms so far with 1.5 months remaining), it has still been a year for the record books.
Beryl had the fastest transition from a tropical depression to hurricane in June or July and became the earliest Category 5 storm in recorded history. Similarly, Milton experienced the phenomenon of “rapid intensification” marking the fastest observed pathway to category 5 status. Meanwhile, Helene became the deadliest hurricane in the United States after Katrina.
Used in reference to extreme weather events, the term “once in a lifetime” seems to have almost become trivial. The frequency and cost of extreme weather events is increasing.
These significant weather events have important implications for our built environment. Communities will choose to rebuild even in areas where risk of hurricanes or flooding are elevated. Investors should not only consider these physical risks, but also reflect on opportunities for greater resilience in housing and infrastructure. As communities rebuild, they can do so more wisely, by incorporating elements of climate adaption.
A Resilient Rebuild
We have identified four sectors likely to experience heightened demand due to the increasing frequency of major storms. Future Positive Investors should focus on companies offering climate-resilient products and services within these sectors as more extreme weather events will drive demand for innovative solutions during the rebuilding process. Furthermore, beyond hurricane recovery, larger trends like reshoring, grid expansion and the urgent need to modernize infrastructure are also driving demand for climate-adapted construction.
FINAL THOUGHTS
The consequences of increasing climate volatility are daunting, but also offer an opportunity to shape a more resilient built environment. As communities rebuild, companies offering climate resilient solutions for essential infrastructure will play a pivotal role in shaping this future.
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