Asia Pacific recorded the world’s highest heat-related labour productivity losses, estimated at US$2.4 trillion, or 2.8 per cent of regional gross domestic product (GDP), according to United States-based financial services and investment research firm MSCI Inc.
To continue reading, subscribe to Eco‑Business.
Access all our exclusive content and archive — with a 7-day free trial. Then just US$5/month. Cancel anytime.
- Exclusive access to training across business and policy topics
- Direct access to industry leaders at Eco-Business events
- A seat among the decision makers shaping the region's sustainable development
These losses reflect reduced economic output when heat limits workers’ ability to do their jobs, including through slower work and fewer productive hours.
The Americas’ losses are estimated at US$809 billion, or 1.7 per cent of regional GDP, while those in Europe, the Middle East and Africa amount to US$668 billion, or 1.1 per cent, according to MSCI’s report, Too Hot to Work?, which estimates losses under current climate conditions, rather than measuring losses already recorded
Under the middle-emissions scenario SSP2-4.5, Asia Pacific’s losses are projected to reach 3.5 per cent of GDP over the next 75 years, before accounting for workers’ physiological adjustment to heat. The scenario assumes carbon dioxide emissions remain around current levels until mid-century before declining.
Asia Pacific’s exposure reflects both local heat conditions and its concentration of heat-sensitive economic activity, said the report. Real estate, consumer staples, industrials and materials – sectors with the largest estimated losses – account for 51 per cent of Asia Pacific’s GDP, compared with 47 per cent in Europe, the Middle East and Africa and 42 per cent in the Americas.
Asia Pacific has the highest estimated heat-related labour productivity losses as a share of regional GDP, both under current climate conditions and in 75 years under the SSP2-4.5 middle-emissions scenario. Image: MSCI
Real estate is particularly vulnerable because of its reliance on construction, which often involves physically demanding outdoor work, noted the study. Estimated heat-related productivity losses in the sector reach 6.1 per cent of output in Asia Pacific, compared with 4.4 per cent in the Americas and 2.6 per cent in Europe, the Middle East and Africa.
“For a developer, this can create a direct financial transmission channel: fewer effective construction hours or mandatory work-rest practices can slow project completion, while additional shifts, cooling or other protective measures can raise costs,” said the report.
If developers cannot make up for heat-related delays, projects could become more costly, revenues could arrive later and profits could shrink, the analysis suggested.
Consumer staples is also exposed through activities such as agriculture and food production, which involve physically demanding work and greater outdoor exposure. The sector accounts for 16 per cent of Asia Pacific’s GDP, compared with 10 per cent in Europe, the Middle East and Africa and 7 per cent in the Americas.
By contrast, communication services and financial services rely more heavily on indoor, less physically demanding work, often in air-conditioned settings. While warming increases losses across sectors, those dependent on outdoor and physically intensive work remain more vulnerable, said the report.
The four sectors with the highest estimated heat-related labour productivity losses - real estate, consumer staples, industrials and materials - account for 51 per cent of Asia Pacific’s GDP, compared with 47 per cent in Europe, the Middle East and Africa and 42 per cent in the Americas under current climate conditions. Image: MSCI
Small but highly exposed group
At the company level, MSCI found that heat-related productivity risks are widespread but uneven. About 81 per cent of the MSCI ACWI Index companies analysed have some estimated revenue impact under current climate conditions, before accounting for workers’ physiological adjustment to heat.
Among affected companies, the median estimated loss is equivalent to 1.25 per cent of revenue. These figures reflect potential losses, not losses already recorded.
A smaller group of 32 companies, representing 1.4 per cent of index constituents, has more than 5 per cent of revenue at risk. Of these, 20 are real estate firms, predominantly property developers and companies with operations concentrated in Asian markets including the Philippines, Thailand, India, China and Hong Kong.
The remaining companies are almost entirely in consumer staples and industrials, including food and agriculture-linked businesses, logistics and transport firms.
For real estate investors, the study stressed the importance of looking at where projects and other labour-intensive activities are located.
“Identifying where development pipelines and other labour-intensive activities overlap with high heat exposure could help distinguish companies whose headline sector exposure appears similar, but whose underlying operational risk differs substantially,” it said.
More broadly, MSCI said investors should examine whether exposure is concentrated in particular facilities or business lines, how often heat already disrupts working hours and whether adaptation plans account for higher future temperatures.
