"Climate Intelligence" Captivates Investors

Climate Intelligence

Investors are beginning to take interest in "climate intelligence" start-ups -- companies that provide analytics to guide organizations on how to manage and lower risks to their operations and profitability as the climate changes. These investors include Chris Sacca, a well-known VC, and Marc Benioff, the CEO of Salesforce, who have funded $30 million in a Series A round for Cervest, a London-based company that has developed an AI-powered climate intelligence platform. Richard Sorkin, the CEO of Jupiter, another climate risk assessment company, summed up the increased interest in the space: "We believe that climate risk management will be a major industry, and we think there will be room for multiple companies," he said to Axios.

Why this Matters

Climate change is creating increased financial risks -- extreme weather events and sea-level rise threaten industries from real estate and construction to travel. This kind of climate information is becoming mission-critical to businesses of all sizes, sectors, and regions of the country. These new climate intelligence companies will charge corporate clients fees for tailored products. But where does the general public come into play? Not to mention those communities most likely to be harmed by climate change -- should they not have the benefit of this kind of "intelligence" too, in the form of government climate "forecasts" and projections they can use to guide personal decisions like where to buy a home?

NOAA: Billion-Dollar Disasters - By the Numbers (1980-2020).

UC Davis Research: How can artificial intelligence help fight climate change?, May 13, 2021.

Risky Business

The climate intelligence space is still new, but in addition to Cervest, there are a few other companies analyzing climate risk. Cervest, for example, has an open platform that aims to enlighten its clients about their risk exposure and show them who is viewing their climate risks, like banks and insurers. Jupiter Intelligence has contracts with the US government, at least one large bank, several major insurance companies, and two major US cities. Meanwhile in the US, Demex, First Street Foundation -- a nonprofit focused on flood risk -- the Rhodium Group, KatRisk LLC, The Climate Service, Clarity AI, and others are operating within the broader risk management sector. Some of these firms help plan for extreme weather, some help clients face the weather event, and some help the clients recover after the event.

According to Steven Bennett, co-founder of the Demex Group, "All-in-all, well over $200-million have recently flowed into early-stage companies that focus on extreme weather events driven by climate change." Plus, the increasing demand for risk and other climate disclosure is giving new impetus to these businesses -- the White House, Treasury Department, SEC, and Federal Reserve are all studying the issue and poised to implement policies.

BBC: Four ways AI can help tackle climate change, April 22, 2021.