The cost of climate: Why workforce health is becoming a core business risk

This is article 2 in the Sustainability Blueprint series. Here is article 1.

In the latest article in my Sustainability Blueprint series, I explore how the “cost of climate” not solely as an environmental or physical asset risk, but increasingly as a material workforce and business cost.

At the core of every economy sits a workforce – a group of people working to build, produce and sustain growth. From infrastructure and agriculture to healthcare and manufacturing, economic progress ultimately depends on the ability of that workforce to operate safely and productively.

As temperatures continue to climb across many parts of the world, often exceeding historical norms for sustained periods, it is becoming less unusual to see prolonged heat, deteriorating air quality and more volatile weather patterns in our day-to-day. Recent research shows that climate change is raising baseline temperatures beyond thresholds for human health, meaning that risks to mortality and wellbeing are now occurring not only during peak heatwaves, but across more typical conditions.[1]

Reading a recent study, I was struck by how stark the projections have become. If historical heatwave conditions, such as those seen in Europe in 2003, were to recur at current warming levels, they could potentially result in around 17,800 excess deaths in a single week, rising to more than 32,000 at 3°C warming.[2] Taken together, these findings point to a shift in how climate risk should now be understood, from an environmental concern to a global, systemic human risk.

Climate as a workforce cost, not just an environmental risk

For employers, the “cost of climate” is increasingly defined not only by physical damage or supply chain disruption, but by its cumulative impact on productivity, absenteeism, healthcare costs and workforce availability. Climate-driven health risks are projected to cost the global economy at least $1.5 trillion in lost productivity by 2050.[3]

At a more granular level, the effects are equally concerning. The World Meteorological Organization has found that productivity declines by 2–3% for every degree above 20°C[4] while even a 1°C increase can reduce labor effort and hours worked by close to 10% in some contexts.[5] Beyond performance, prolonged heat exposure is increasingly linked not only to acute illness but to a wide range of chronic conditions, including cardiovascular disease, kidney injury and respiratory illness.[6]

Compounding risks and reactive measures

While climate risk is widespread, certain sectors and working conditions remain disproportionately exposed, particularly those that combine physical labor with limited access to climate-controlled environments. Industries such as construction and utilities continue to face the highest levels of risk, with some evidence suggesting they can experience up to double the healthcare cost exposure linked to climate-related factors.[7] Warehouses, by design, are difficult to regulate thermally, their high ceilings and constant movement of goods mean they absorb and retain heat, often pushing internal temperatures well above what is considered safe.

In one documented case, indoor temperatures exceeding 33°C necessitated mandatory worker breaks, reducing available labor time by as much as 10–20 hours per employee per week, prompting investment in targeted cooling solutions to stabilize working conditions[8]. More broadly, large corporations globally are beginning to move beyond mitigation and into structural redesign. In global manufacturing supply chains, for example, investment in relatively simple, human-centric measures – shaded workspaces, dedicated cooling areas, improved hydration access and adjusted shift patterns – has supported operational improvements, including a 14% increase in labor productivity and a 45% reduction in absenteeism.[9] Climate, in this sense, is becoming a measurable and material driver of cost.

A growing gap between impact and awareness

Despite the growing body of evidence, a notable gap remains between employee experience and employer preparedness. While 77% of workers report being affected by climate events, only 4% of employers have assessed which employees are most at risk, highlighting a disconnect between exposure and awareness.[10]

This disconnect presents both a risk and an opportunity, as without clear visibility, businesses may underestimate the financial and operational implications of climate on their workforce. Conversely, organizations that invest in understanding these risks can begin to take more targeted and proactive action.

Looking ahead

Climate-related workforce costs may be likely to continue to rise as heat and environmental stress become more persistent. While adaptation can mitigate some impacts, it will not eliminate them.

What is becoming clearer, however, is that targeted interventions, from data-led risk monitoring to relatively simple workplace adjustments, can help to reduce both health risks and productivity losses, as climate change becomes a structural business variable.

This article is also published on LinkedIn. illuminem Voices is a democratic space presenting the opinions of leading Sustainability Thought Leaders, their views do not necessarily represent those of illuminem.

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