Climate change has captured headlines around the world as sea levels continue to rise, entire cities come under threat, and extreme weather patterns become the norm. From fires in California to droughts across the Southeast, more than 800 million people find themselves vulnerable to these changes.
In the same way that governments prepare for the future under these conditions, global enterprises must plan for the costs and risks that climate change brings to their business.
After a decade at Coca-Cola, James McMahon saw how big data could help enterprises predict risks. His background in physical science and atmospheric chemistry took him to North Carolina to work at NOAA’s National Climatic Data Center. That’s when he realized climate data could bring the same value to enterprises.
“I realized, since I had been in the corporate world, that the data they had about how the climate currently is and will be varying and changing was going to be tremendously valuable to the business world.”
“But I also knew that it needed to be translated into the language that business speaks — money,” says McMahon.
McMahon co-founded climate analytics firm The Climate Service to answer that question for enterprises: How could climate change financially impact them and their assets?
“We help companies understand not just what’s their impact on the climate, but more importantly, what’s the climate’s impact on them,” says McMahon.
“We started building a system that would allow businesses to quickly answer on their own terms and be able to run those models and see both the physical risks and transition risks all together.”
The Climate Service monitors, manages and processes analytics from two different pathways. The company considers physical risks like threat of wildfire, flood, and drought to the enterprise’s assets and transition risks as the enterprise moves to a new energy or low-carbon economy. Transition risks can include climate-related litigation, shareholder demands, and more.
“Right now the transition risks might be more important, but in 10 years, the physical risks might become more important,” he says. “For example, what if a factory is too close to the ocean and there are frequent storm surges as sea levels rise. That could affect that asset disproportionately.”
The enterprise client only adds their assets and their location to the platform to get started. The startup then uses data from NOAA, governments from around the world, academic sources, and publicly and commercially available data sources for its models.
Once the company understands the risks, they can either employ The Climate Service’s partners to help address the issues raised or work on the problem independently.
The SaaS platform already has large enterprise customers on its roster, including JetBlue, Micron Technologies, and university endowments, as well as investors in the food & beverage and real estate industries. They also just formed a business alliance partnership with IBM to teach enterprises how to best integrate this data into their ongoing decision-making process.
McMahon only sees this market growing. In the past six months, he shares that the Durham startup’s sales have increased more than ever before. “It’s like someone flipped a switch,” he says.
The company believes that the creation of the G20 Financial Stability Board’s task force has contributed to The Climate Service’s success as well. The task force, which found more than $115 trillion in assets at risk, required enterprises from around the world to disclose how climate change would affect their assets and bring transparency to investors.
To date, The Climate Service has raised about $2 million total in outside investment. They’re currently in fundraising their Series A round to continue scaling to meet increasing customer demand. They’re currently hiring business analysts, full-stack developers, and data analysts to double up their team of six.
The company also has offices in Asheville, NYC, and Washington, D.C.