Scorched Profits & Burnt-Out Performance: Extreme Heat at Work

·      In the past year, over half of companies report extreme heat negatively impacting operations.

·      The “observable increase of extreme heat events” is among the most important emerging risk for companies, particularly as businesses face potential legal action for failing to mitigate heat-related harms.

·      Sales and operations face increasing operating costs and disruption due to rising temperatures.

·      Heatwaves in 2025 carry “significant economic costs”. Adaptation is key, and some productivity losses can be mitigated if properly addressed.

These statements aren’t from green lobbyists, ivory-tower academics, or think tanks pushing an agenda. In order, they can be found in a 2025 report by Morgan Stanley (a leading multinational investment bank), the emerging risk insights report by Swiss-Re (a global insurance and re-insurance provider), Amazon’s annual report to the U.S. Securities and Exchange Commission, and Allianz-Trade, a German trade credit insurance firm. These institutions understand extreme heat is- and will increasingly- affect their bottom line.

In this article, we describe how extreme heat is currently affecting company profits and operations and explore the future impact of extreme heat on business. We’ll focus on worker productivity and workplace safety- areas Qore Performance provides innovative, adaptive solutions for workers challenged by extreme heat.

Understanding the Challenge

For the individual employee, the causal pathway between extreme heat and declining productivity is based on two immutable facts: (1) Humans must maintain a body core temperature within a narrow range centered at 98.6^oF and (2) Working requires energy[1], most of which is converted to metabolic waste heat that must be transferred outside the body to avoid overheating.

Although humans are amazing adept at regulating body temperature, today’s extreme heat- especially longer, more frequent, and more severe heatwaves- increasingly create environments capable of exceeding human physiological limits. As temperatures rise, the human body devotes increasing attention to keeping cool. This comes with tradeoffs, particularly to physical endurance and cognitive ability.

Productivity

While sweating is an obvious indicator of the body working to keep cool, an equally important human response to extreme heat is thermal self-regulation- i.e., slowing down, taking breaks, and seeking shade or air conditioning.

Our self-pacing instinct is largely driven by heart rate, which positively correlates with core temperature; as core temperature rises, heart rate increases to circulate heat from our core to the skin surface. Self-pacing can be very protective even in hot conditions. One study notes (most) workers in a hot environment effectively kept core temperature in a safe range despite the workers being “rather old and [having] a rather low physical capacity”. The tradeoff? Each worker spent only about 25% of their shift performing actual work, trading rounds of effort with each other while resting in between. The “loss” of three-quarters of a shift means performing a task (in this study, furnace maintenance) takes four times as long (or requires four times as many employees)!  

While this may be an extreme case study, productivity losses due to extreme heat are widely recognized across diverse occupations like construction, agriculture, and indoor warehouse and factory work. In one oft-cited report, the International Labour Organization claims worker capacity for moderate-intensity jobs is 50% lower when conditions exceed about 93^oF.

Given observed temperature trends, a conservative[2] 2.2% of total working hours may be lost to extreme heat globally by 2030. An OECD[3] economics paper notes the effect of extreme heat and heatwaves on productivity is “substantial”, most significant for smaller companies, and strongest in places where extreme heat is typically uncommon- a classification that applies to much of the U.S.

Extreme heat affects occupations beyond those associated with manual labor outdoors. In fact, the greatest productivity losses in coming decades are thought to be in the services sector. Headlines like “outdoor work in tourist hot spots is becoming hellish” were commonplace during European heatwaves this year. Local governments in Greece imposed limits to outdoor work, even shutting down tourism at the famed Acropolis for parts of the day. The Eiffel tower in Paris closed this summer over heat-related safety concerns. Closer to home, two performers fainted from heat at Disney World before performing in the Beauty and the Beast show.

There also appears to be no adaptive remedy for severely hot temperatures even in places used to hot weather, implying a limit to how well companies are currently adapting to increasingly extreme heat. Increasingly innovative solutions to worker heat stress will become ever-more critical to maintaining many business operations.

A recent collaborative report between the World Health Organization and the World Meteorological Organization provides an overview of the consequences of intensified heat stress and amplifies the negative effect of heat on productivity. Along with agriculture and construction, the report notes extreme heat disrupts primary production and trade, creating significant spillover effects on the wider economy. Using wet bulb globe temperature (an occupationally-relevant temperature index incorporating a number of environmental factors), a 2.4% decrease in labor productivity is cited for each 1.8^oF above an optimum working temperature of around 60^oF. Among key recommendations is the need to adopt technological solutions to augment worker safety and productivity for those experiencing heat stress.

Worker’s Comp Claims

Decreasing worker productivity is only half the story. Overheated workers experience declining mental performance (we explore the relationship between heat and cognitive performance in this previous article). Less alert and responsive employees are more prone to workplace accidents. While various study results differ, days above 90^oF generally correspond to a 3-9% increased risk of workplace injury, while days above 100^oF can increase injury risk well above 15%.

Worker compensation claims provide robust datasets to explore the link between workplace injury and extreme heat. One example comes from Washington State, where epidemiological techniques[4] applied to State worker comp claims found a 15% greater risk of traumatic injury for agricultural workers when temperatures on the Humidex index ranged between 86-91.4^oF (similar to the Heat Index, the Humidex is a “feels like” temperature that accounts for humidity).

The most extreme temperatures lead to the highest rates of injury. An analysis of 24 U.S. States found a 5.3% increase in injury counts on days with maximum temperatures between 90-95^oF, jumping to 6.1% on days when temperatures top out above 100^oF. Although the effect is largest in the construction sector, others- including transportation, manufacturing and health- also trend upwards with rising temperature.

Table from Workers Compensation Research Institute, “Impact of Excessive Heat on the Frequency of Work-Related Injuries”.

The Medical Journal of Australia has gone as far as analyzing country-wide compensation and hospital data, finding 2.3% of occupational injuries nation-wide can be attributed to high temperature.

Injury during extreme temperatures can, in extreme cases, lead to workplace fatalities. This can be directly due to heatstroke or indirectly from workplace accidents. Farm workers, laboring outdoors in hot weather, die from heat stroke at a rate nearly 20 times greater than the average U.S. worker. Over the last thirty years, heat exposure directly resulted in an average of 34 recorded worker deaths a year. Due to mis- and under-reporting, this may be a significant undercount; some estimates place U.S. worker heat fatalities as high as 2,000 a year.

Business Implications

Protecting against heat stress carries costs, whether it be upgrading building insulation, running the A/C more often, or providing individuals heat mitigation gear. However, the alternative- doing nothing- can be far more costly. Fallouts associated with life and health claims related to extreme heat top the list of short-term emerging insurance risks in a recent Swiss Re report, above even deepfake-enabled insurance fraud. Quoting directly from their report, Swiss Re states:

·      Liability exposures may also rise as employers and institutions face legal risks for failing to provide employees and others with duty-of-care mitigation measures.

·      Employers failing to provide adequate hydration, rest breaks and other preventative measures may face employers’ liability claims.

Swiss Re is not alone in linking increasing hot temperatures to a rise in workplace compensation claims. Zurich, another insurance group, similarly reports increasing extreme temperatures will increase worker health risks while decreasing productivity. The National Council on Compensation Insurance finds the frequency of worker compensation claims due to hot temperature had a “large and statistically significant” increase over the twenty year period ending with 2022.

Analyzing heat-related illnesses, the Workers Compensation Research Institute found almost all heat related illness claims resulted in medical payments. Most heat illness claims happen (as you would expect) on days with hotter temperatures, with over 50% occurring when temperatures are above 90^oF. With heat season in the U.S. lasting longer and becoming more intense, heat stress related worker injury claims are virtually certain to continue trending upward.

In the U.S., specific weather-related heat safety regulations don’t exist at the Federal level. Heat illness prevention is instead generally considered under OSHA’s “general duty clause” requiring employers to provide a workplace free from recognized hazards likely to cause death or serious physical harm. As extreme temperatures start affecting more workers and affecting workers for longer periods and with more severe heat, employers must increasingly consider how to address the challenge.

Source: USGCRP

The Bottom Line

Today, about 5% of the U.S. population is subject to more than 100 days each year with temperatures above 90^oF. The associated heat-related productivity losses already cost the U.S. economy, on average, about $100 billion a year. In just ten years, this number is expected to rise to $200 billion. By mid-century- around the time a child born today is entering the workforce- the percentage of the population likely to experience 100+ days a year above 90^oF will be three times higher (around 30%), with an associated $500 billion in annual productivity loss to the U.S. economy. Similar figures are independently provided by other organizations as well, such as the Perryman Group, which estimates $110 billion in losses from record-breaking heat in 2024.

Heatwave effects are pervasive. According to an Atlantic Council-Rockefeller Foundation report, aside from a handful of counties in Alaska, everywhere in the U.S. already experiences at least some economic loss from extreme heat.

Business seeking to protect workers and their bottom line must adapt to the reality of increasingly intense extreme heat. Qore Performance offers a lineup of solutions to mitigate heat stress. Wearable products like the ICEPLATE® Hydration Backpack and ICEPLATE® SLK Gen 3 Safety Vest keep employees cool and hydrated in the most intense heat. Products like the ICECASE Gen 3 Cooling iPad Case protect equipment, while ICEFLASK® can be frozen and used for hydration or as a replacement for ice in coolers. These innovative Qore Performance products help prevent productivity from melting down in the heat.