Get the latest market trends in your inbox

Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Hurricane Sandy strikes NYC, 2012. Photo: Christos Pathiakis/Getty

When the subject of the world's most lucrative future industries arises, the business and financial worlds usually speak of coming bonanzas in AI, robots, the internet of things, 5G and driverless cars. What goes all but unmentioned is a nearer-term play that rivals them in scale — the utterly embryonic business of extreme weather.

What's happening: Over the next 5 years, existing global companies estimate that they will earn more than $2.1 trillion in revenue from services such as financing, building and hardening resilient infrastructure, according to a groundbreaking survey.

  • If accurate, the sum, based on estimates from a survey of 7,000 companies representing half the market cap on the world's major stock exchanges, is remarkable given that the industry has only just begun.
  • "So many companies are used to thinking of only the risk side of climate change. But here is $2 trillion of opportunity in the next 5 years from leaning into the transition," says Bruno Sarda, a senior executive with CDP, the U.K.-based environmental disclosure nonprofit that produced the survey.

The big picture: Historically speaking, some of the greatest global fortunes have been earned in episodes of chaos, like war, economic depression and natural disaster, when profiteers have figured out how to manipulate circumstances to personal advantage.

  • And for years it has been plain that climate-influenced extreme weather — outsized hurricanes, unusual heat and cold, tornadoes, drought, floods and wildfires, not to mention rising seas — is exactly this type of event.
  • What has not been known is what types of businesses will arise to profit over the coming years, decades and even centuries.
  • And businesses have been loath to talk about it, partly out of fear of appearing to be planning to profit from mass misery.

Driving the news: Now, though, companies are talking. The turning point was 2017, the year of hurricanes Irma, Jose and Maria, not to mention enormous deadly wildfires in California. "Those really brought it home for U.S. businesses," says Emilie Mazzacurati, founder of Four Twenty Seven, a Berkeley, California-based firm that calculates the risk posed to physical assets by extreme weather.

  • In a small sign of this future windfall, Moody's said Wednesday that it bought a controlling share of Four Twenty Seven, whose clients are businesses like power and real estate companies assessing their financial exposure to extreme weather events. The terms of the deal were not disclosed.
  • What Four Twenty Seven does: The company overlays climate models and geographical maps of a company's assets and then forecasts the climate risk to the holdings as far out as 2040, Mazzacurati tells Axios.

At that stage, the companies can figure out how they want to respond — or not — by reinforcing, replacing or retiring exposed assets, all of which would be part of the future extreme weather industry.

What's next: CDP's Sarda says that the 5-year revenue estimate is actually likely to be larger than $2.1 trillion because that's only the sum from 224 companies that answered the survey in great detail. On top of those are roughly 6,775 companies that gave incomplete answers, in addition to the thousands or perhaps tens of thousands of startups yet to be created in response to the weather.

Where the revenue may be earned:

  • Banks and financial institutions stand to rack up substantial sums funding expensive, capital-intensive projects making infrastructure more resilient against extreme weather, Sarda says.
  • The power industry may lose assets such as fossil fuel-burning plants, which may have to be shut down because of carbon restrictions, but expensive new infrastructure would be required such as distributed generation and battery storage.

Go deeper

3 hours ago - Politics & Policy

Rahm Emanuel floated for Transportation secretary

Rahm Emanuel. Photo: Joshua Lott for The Washington Post via Getty Images

President-elect Biden is strongly considering Rahm Emanuel to run the Department of Transportation, weighing the former Chicago mayor’s experience on infrastructure spending against concerns from progressives over his policing record.

Why it matters: The DOT could effectively become the new Commerce Department, as infrastructure spending, smart cities construction and the rollout of drone-delivery programs take on increasing economic weight.

3 hours ago - Politics & Policy

Biden turns to experienced hands for White House economic team

Illustration: Sarah Grillo/Axios

Joe Biden plans to announce Cecilia Rouse and Brian Deese as part of his economic team and Neera Tanden to head the Office of Management and Budget, sources tell Axios.

Why it matters: These are experienced hands. Unveiling a diverse group of advisers also may draw attention away from a selection of Deese to run the National Economic Council. Some progressives have criticized his work at BlackRock, the world's largest asset management firm.

Biden taps former Obama communications director for press secretary

Photo: Mark Makela/Getty Images

Jen Psaki, who previously served as Obama's communications director, will serve as President-elect Joe Biden's press secretary, the transition team announced Sunday.

The big picture: All of the top aides in Biden's communication staff will be women, per the Washington Post, which first reported Psaki's appointment.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!