Thursday 21 October 2021

‘Rising temperatures lead to less business sales’

‘Rising temperatures lead to less business sales’

Business sales drop by 2% when daily temperatures increase by 1°C.

That’s according to a new study from the Imperial College Business School, which has linked local spikes in temperatures to less cash coming into businesses’ pockets.

The research used data of more than 12,000 transactions made between 2000 and 2015 in the United States and analysed the impact global warming had on the numbers.

The study revealed that a 1°C rise in temperature led to a 2% decrease in sales to clients over a one-year period.

The researchers put this down to three main reasons:

  • How heat negatively impacts staff productivity and work rate – higher temperatures can make working conditions more difficult especially in industries such as manufacturing that are heat sensitive.
  • Companies can relocate resources to different branches if they have enough funding, whereas cash-strapped businesses may struggle to divert resources if they are located in warmer locations – leading to further productivity loss.
  • If production is impacted by the heat, then clients may simply move to another supplier who is in a location with less temperamental weather and take further profits away from them.

Dr Claudia Custodio, who led the study, said: “It is widely accepted that the global mean temperature is increasing. Businesses will be hurt by a hotter planet but with global rises in temperatures of up to 2°C on the horizon, we need to know who will suffer and by how much.

“If we know in advance which countries and which parts of the economy will be hit hardest, policymakers can act to mitigate the damage.

“Not only will rising temperatures have an impact at a macroeconomic and wider organisational level but wages might be affected and some companies in highly competitive sectors may even go under because of hotter climates effecting their wider sales strategy long-term.”

Written by

Bruna Pinhoni

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