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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

Toyota to build $1.3 billion U.S. battery plant in North Carolina

The all-electric Toyota bZ4X, the company's first battery-electric vehicle, at the Los Angeles Auto Show in Los Angeles, California on Nov. 17. Photo: Frederic J. Brown/AFP via Getty Images

Toyota announced Monday it's investing $1.3 billion to construct an electric vehicle battery "megasite" near Greensboro, North Carolina, set to open in 2025.

Why it matters: Toyota's Prius hybrid won environmental plaudits when it launched in 1997, but it has since lost ground to electric vehicle world leader Tesla, per Axios' Joann Muller. This battery plant will be the first to produce automotive batteries for Toyota in North America.

2 hours ago - Politics & Policy

Congress hunts for shortcut to pass defense funding, debt limit combo

Senate Majority Leader Chuck Schumer returned to his office Monday. Photo: Anna Moneymaker/Getty Images

The scramble in Congress to pass the National Defense Authorization Act is being complicated by an effort to tie it to a needed hike in the federal debt limit.

Why it matters: The House and Senate are rapidly coming up against a series of deadlines they must address before the end of the year — or risk disrupting crucial military funding and upending the economy. Congressional leaders are now hoping they can knock out both "must-pass" priorities in one, complex swoop.

Scoop: Inside Jake Sullivan's call with U.S. hostages' families

Photo: Jim Lo Scalzo/EPA/Bloomberg via Getty Images

National security adviser Jake Sullivan spoke last week with relatives of U.S. hostages and others wrongfully detained abroad, after more than two dozen families expressed frustrations about their inability to get a meeting with him or President Biden, Axios has learned.

Why it matters: Participants on the video call, which began at 7pm ET Friday and lasted more than an hour, told Axios they didn't get satisfactory answers to many of their questions. Nonetheless, they were encouraged by Sullivan's commitment to follow up and pledge to be personally available to them and others going forward.

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