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March 29, 2023updated 29 Jun 2023 1:24pm

Startups are using AI to help businesses weather the next climate catastrophe

Climate resilience startups are riding to the rescue of corporations and homeowners anxious about how rising temperatures and extreme weather might affect their assets.

By Stephanie Stacey

Extreme weather damages economies as well as ecosystems. The intense flooding that struck California in January 2023 brought economic losses of between $5bn to $7bn, according to figures from Moody’s. Last summer’s record-breaking wildfires cost Spain €2.98bn, according to the European Forest Fire Information System. 

These figures are likely to keep piling up without major mitigation measures, as experts suggest global temperatures are likely to breach the agreed ceiling of 1.5 ºC of warming in the 2030s — sparking more floods, wildfires, heatwaves, droughts, and tropical storms. Our increasingly chaotic weather can be a nightmare for business: it disrupts supply chains, forces mass evacuations, halts labour, damages property, and might even make entire regions uninhabitable.

A growing field of startups have built a business out of helping companies — sometimes quite literally — weather the storm. The latest report by the UN’s Intergovernmental Panel on Climate Change (IPCC) hailed ‘climate resilient development’ as the only path to survival on our rapidly-warming planet. Startups like ClimateAi, Cervest, One Concern, Climate Alpha, Climate X, and Climavision are trying to facilitate this climate resilience by using machine learning to analyse masses of data, recognise weather patterns, and make highly-specific localised forecasts — helping businesses stay one step ahead of the next climate catastrophe.

As climate change accelerates, logistics will become unpredictable. A new breed of startups are using AI and satellite imagery to bring increased certainty amid the growing chaos. (Image by Naypong Studio / Shutterstock)

Climate resilience startups to the rescue

Himanshu Gupta, CEO of San Francisco-based ClimateAi, is no stranger to the perils of extreme weather. Growing up in a small village in northern India, Gupta recalls regularly walking a mile to fetch clean water for his family when the often-delayed monsoon season brought widespread drought to the region. Having seen his mother grapple with the stress of raising four children without reliable access to drinking water, Gupta says climate resilience is ingrained in his psyche.

Gupta and co-founder Maximilian Evans launched ClimateAi in 2017 out of the dorms of Stanford University. Their startup — which has raised $16.2m in funding — is specifically concerned with future-proofing global supply chains, which Gupta believes are unprepared to face the devastating impacts of extreme weather. The company’s AI-driven insights are designed to make supply chain management predictive, rather than reactive: “We’re not saying we have a crystal ball,” says Gupta, “but we can help supply chain managers make their inventory allocation decisions better.” 

One of his favourite examples comes from last year’s hurricane season. People generally want to rebuild their homes straight away after a storm, but construction materials tend to be very heavy — meaning it can take a long time to transport them to the towns where they’re suddenly most-needed. In 2022, ClimateAi worked with a supplier of roofing shingles to forecast likely landing sites for the season’s biggest storms up to three months in advance, long before they’d begun to form over the Atlantic. This helped the supplier move its materials to the right places before highly-destructive Hurricane Ian touched down in Florida, meaning locals could quickly grab the tools they needed and the supplier could secure big profits by meeting the surge in demand.

While ClimateAi focuses on global supply chains, other startups are trying to tackle the on-the-ground operational challenges caused by climate change. One Concern, which was founded in 2015 and has raised $119.2m, is one of the oldest players in the “climate resilience” field. It uses digital twins — virtual models of physical infrastructure — to visualise potential real-world impacts of extreme weather on infrastructure in the United States and Japan. Rather than focusing on direct climate-related damage, One Concern uses probabilistic machine learning and satellite imagery to forecast disruptions to what it describes as the ‘lifelines’ that keep a business running, like public transport, roads, and every single power pole supporting the US electrical grid. 

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“Our secret sauce is understanding that dependency risk,” says CMO Joe Paluska. The advantages of this strategy were made clear to Paluska right before his interview with Tech Monitor, when heavy winds knocked out power to his California residence.  “If my home was a commercial entity, I would lose money,” he says.“That’s why our work matters.”

Flood defences saved homes in the village of Bewdley in the UK from being inundated by the River Severn when it burst its banks in 2019. Startups like Climate Alpha see the residential market as a key user of services intended to make the exigencies of climate change more predictable. (Image by Alex Daniels/Shutterstock)

Resilient real estate

It shouldn’t be a surprise that climate resilience startups are taking a keen look at the state of the residential market, too, which remains the world’s latest asset class and most families’ largest financial investment. Climate Alpha, which raised a $4m seed-round in 2022, aims to help real-estate developers steer their investment toward climate-resilient regions by forecasting annual  property values up to 2040 under various emissions scenarios.

As well as producing large-scale forecasts for developers, Climate Alpha offers a free digital product providing climate-adjusted property valuations for individual homeowners in the US and Canada. The startup developed this tool after being inundated by inquiries from families who’d lost their homes in Hurricane Ian. “They were just coming to ask us: Where should I move? Where should I retire? What value will be left for my kids?” explains co-founder Greg Lindsay. 

There are a lot of variables to consider when offering climate-adjusted property values, even beyond the basic physical complexities. Having a local government that’s willing to invest in a seawall or in desalination facilities can be “just as important” as predicting the core physical risks, explains Lindsay, which is why, he adds, Climate Alpha factors in public spending when assessing the climate readiness of any given postcode.

It’s also hard to know just how bad everything might get. Most climate resilience startups provide variable forecasts for different emissions scenarios. For its part, Climate Alpha uses  RCP models — which offer several different warming projections based on the different quantities of greenhouse gases that might be emitted in the coming years — but it’s also developing its own, more extreme forecast after several clients “asked for the ultimate worst-case scenario,” says Lindsay.

Building ‘resilience’ doesn’t just mean avoiding risky areas, says Raiyan Ahmed, marketing director of UK-based startup Climate X, which offers a similar service to Climate Alpha. Climate X uses a combination of physical risk modelling and machine learning to provide projections of how various climate challenges will impact physical spaces — helping real estate companies, building societies and banks figure out the future of their portfolios. 

Ahmed emphasises that there are plenty of reasons — many of them fairly unscientific — why people might want to build in a particular area. After all, Venice’s property prices remain sky-high despite the city’s annual sinkage. Rather than rejecting a vulnerable zone, Ahmed says a well-informed developer might use Climate X’s insights to choose specific materials that can endure big temperature fluctuations or build strategic flood defences to protect desirable land.

A helicopter douses a raging wildfire. Pairing AI with real-time satellite imagery during extreme weather events could help shore up the security of supply chains as well as householders. (Image by Toa55 / Shutterstock)

Counting climate costs

One of Climate X’s biggest early investments came from specialist climate tech VC Pale Blue Dot. Heidi Lindvall, one of Pale Blue Dot’s co-founders, told Tech Monitor that she expects the broader climate resilience sector to see a lot of growth in the coming years — mainly out of necessity. “We’re running out of time to reverse the damage of climate change so we’re going to be forced to turn to defensive measures,” Lindvall warns. 

It’s a grim outlook for the planet, but a strong sign for these startups’ bottom lines. Indeed, UK-based research firm Verdantix estimates the climate risk digital solutions market will skyrocket to $4 billion by 2027. Nevertheless, not everyone is ready to get onboard. Following the release of PwC’s 2022 CEO Survey, Global Chairman Bob Moritz said he feared some business leaders “may be setting too low a bar for climate resilience.” He warned that some CEOs — incorrectly — see climate change “as a compliance matter,” rather than an issue that could “strike at the heart of their business models.” 

Lindsay echoes this perception. He says Climate Alpha has been actively “prodding” its clients to see climate investment as “the future of their investment portfolios” rather than an administrative hurdle for their ESG team. Right now, Lindsay says companies are “just barely beginning to realise” that “the whole conversation around climate resilience needs to change — and is already changing under our feet.”

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