The Hidden Cost of Climate Change on Human Productivity

When we think of climate change, we often picture rising sea levels, melting polar caps or extreme storms. However, there’s a less visible but equally significant impact: the toll it takes on human productivity.

For business leaders and organisations, this means slower growth, increased costs, lower efficiency, and higher risk. Recognising this “hidden cost” is essential for building resilience.

Labour and Heat Stress

A recent report from the Organisation for Economic Co‑operation and Development (OECD) found that between 2000 and 2021, 23 advanced economies experienced an increase in the frequency of very hot days and heatwaves.

These events have significant consequences for labour productivity, particularly in smaller firms. The “Heat Stress and the Labour Force” report by the London School of Economics and Political Science (LSE) highlights that, under a high warming scenario, effective labour declines in heavily exposed sectors could reach approximately 33% in Africa, 25% in Asia, and 18% in Oceania.

According to the International Labour Organisation (ILO), by 2030, around 2.2% of global working hours may be lost due to heat stress in a 1.5 °C warming scenario, which translates to about 80 million full-time jobs.

Furthermore, some studies project that under a high warming pathway, regions such as Southeast Asia could see labour capacity losses of 11% to 27% by 2080.

Physical Work in Heat

In Chennai, India, one study measured workplaces during the hot season (Wet-Bulb Globe Temperature ~ 29.7 °C) and found very high heat exposure in industrial, service, and agricultural sectors, with associated productivity loss.

For construction workers worldwide, analysis shows that male workers over 38 and female workers are more sensitive to heat, suggesting that there could be consequences on labour diversity unless action is taken.

Agriculture Productivity Loss

A study led by Cornell University found that climate change has reduced agricultural productivity growth by approximately 21% since the 1960s.

This reduction is equivalent to losing around seven years of productivity gains in agriculture. Modelling suggests that by the end of the century, global agricultural labour productivity could decline by 5% to 18% if labour heat shocks are taken into account, which would also affect crop yields and prices.

Furthermore, the United Nations Development Programme (UNDP) reports that more than 90% of the countries assessed (161 out of 176) are projected to experience declines in staple crop yields by the end of the century, even with some adaptation measures in place.

Business losses

The OECD paper (2024) found that smaller and less productive companies suffer disproportionately under heat stress, highlighting the importance of passive cooling, building design, and local climate adaptation.

In business terms, reduced productivity means reduced output per hour. This translates to higher unit costs, lower margins, and slower delivery times. Outdoor, manual, agricultural, and low-income region workforces are more vulnerable, potentially creating inequality issues within the workforce.

What Can We Do to Mitigate the Impacts?

There is no single “fix” but a combination of strategies at business, sectoral and policy levels can make a difference. The good news is that many options are cost-effective:

• Adjust working hours: Shift heavy physical work to cooler parts of the day (early morning, evening) to reduce heat exposure.
• Improve workplace climate control: For indoor work, better ventilation, passive cooling and air-conditioning where feasible; for outdoor work, shade, cooling shelters, breaks and hydration protocols.
• Invest in equipment & mechanisation: Especially for heavy physical tasks or in agriculture, reduce the physical burden on workers so that heat stress has less impact.
• Training & health monitoring: Educate the workforce on heat risks, recognize heat-related illness, and use wearable tech if possible (especially for outdoor work).
• Workforce planning & scheduling: Recognise that heat will reduce effective capacity; plan for extra rest time, slower rates, and buffer in timelines.
• Supply-chain risk assessment: Evaluate which parts of the chain are most exposed to heat risk (agriculture, raw materials, outdoor logistics) and build redundancy/adaptation there.

Local and national authorities can also play an essential role in ensuring labour health and safety is upheld and that people can work in optimal conditions by:

• Infrastructure and building design: Passive-cooling architecture, better insulation, and green urban planning that reduces urban heat islands.
• Standards & regulation: Worker health and safety standards need to include heat stress risk; firms should comply with local regulations and perhaps go beyond them.
• Agricultural adaptation: Promote heat-tolerant and drought-resistant crop varieties, improved irrigation, and mechanisation. From the UNDP: many countries will face sharp yield declines without adaptation.
• Technology and R&D investment: To offset productivity loss, large increases in public R&D are needed.
• Climate mitigation: Ultimately, limiting warming means fewer productivity losses. So committing to emissions reduction, stable policy environment, and resilience-building is critical.
• Data & monitoring: Governments should monitor workforce heat exposure, output trends, absenteeism, and error rates to have early warning of productivity erosion.