Explainer: what is El Niño and how could it impact businesses?

A recent study shared that the extreme weather linked to the average El Niño costs the global economy about USD3.4 trillion, and these economies bear the scars of El Niño for a decade or more and potentially forever. But what is El Niño and why should organizations use climate intelligence (CI) to prepare for its impacts?

El Niño is the positive phase of ENSO (El Niño-Southern Oscillation). El Niño is a term that describes the warming of ocean surface temperatures, which happens every two to seven years in the eastern equatorial Pacific. The opposite, La Niña, is when cooler than usual sea surface temperatures occur in the same region. Both El Niño and La Niña can affect the global weather, economies, and ecosystems – they often last for nine to 12 months, but they have also been known to last for multiple years.

During El Niño years, world regions might experience dramatic weather extremes, such as heavy or persistent rainfall, droughts, or even wildfires. The largest El Niño event in recent decades was from 1997 to 1998.

This year, scientists are predicting an El Niño weather event. Alongside climate change, this El Niño could break warm weather records in 2024.

In the most recent UN climate assessment, scientists illustrate the massive rise in the ocean’s heat from 1971 to 2018 as one of the impacts of human-driven climate change. There was an extra 396 zettajoules of heat: as mentioned in The Guardian, it was calculated as the same energy as over 25bn Hiroshima atomic bombs. And it is continuing to advance.

Under the oceanic surface, a lot of warm water has accumulated, which could lead to an intense El Niño, with more severe climate-driven weather events. The seasonal forecast consistently predicts a strong El Niño to happen in the coming months. This means we could see more extreme rainfall, heatwaves, droughts, or wildfires.

Climate-driven events can affect organizations in myriad ways. Extreme heat, wildfires, and droughts can threaten public health, livelihoods, and cause firms to close. Floods such as those in Italy in 2022 can devastate entire regions in a country.

Apart from the dangers to communities, severe weather events can put a halt to business production, operations, and supply chains. In some industries, such as the water-intensive pharmaceutical industry, this has dire consequences when people cannot access life-saving medicines. Buildings and infrastructures that are not climate-resilient shut down completely.

Global organizations must get ahead and be prepared for the worst-case scenario. To do this, they need to build a comprehensive picture of climate risk. A view available through Cervest’s climate intelligence (CI).

One thing’s for sure, companies need to have robust assets and portfolios that can withstand our increasingly volatile climate. At Cervest, we use five-year time horizons to assess climate risk for the exact reason mentioned – interannual variability. The climate system is inherently chaotic, meaning that there are fluctuations from year-to-year, driven by phenomena such as El Niño and La Niña. By providing five-year increments, we smooth out that variability to enable the longer-term changes in climate risk to be more clearly visible to users.

EarthScan™, Cervest’s climate intelligence product, allows organizations access to valuable, decision-useful CI that serves as a single source of truth. These science-backed insights help leaders to make informed adaptation plans across their portfolios, so they can be confident they are building climate resilience into each and every built asset.