Climate adaptation is the biggest challenge and opportunity for supply chains today. A 2021 report from the international NGO CDP found that climate change will cost companies $1.3 trillion by 2026. Extreme weather events, from floods to wildfires to droughts to heat, are increasingly causing everything from property damage to spiking insurance costs to lower-yielding assets. The Texas freeze event and the PNW heat dome event have cumulatively cost $33B in losses in 2 weeks alone. As of today, in many places around the globe, there is likely an extreme weather event impacting lives, livelihoods, and causing economic losses.
ClimateAi is a climate resilience platform for the world and a pioneer in applying artificial intelligence to mitigate the impact of climate change on lives, livelihoods and nature. By applying AI to climate risk modelling it provides long-term insights into weather and climate impact and helps businesses to get information that they need today to take the actions needed now to adapt to the climate change and disruptions of tomorrow.
ClimateAi uses a unique blend of proprietary machine learning based forecasts and analyses and more traditional climate physics along with vast amounts of public and private weather and agronomic data to create accurate and actionable predictions and decision recommendations.
I sat down with Himanshu Gupta, CEO and Co-Founder of the ClimateAi to learn more about the steps that led him from his native India to working with Al Gore and all the way to founding ClimateAi in late 2017.
Himanshu comes from a small village in north India and he recalled walking a mile to get water for his family from the nearest river when drought and deficit monsoon seasons struck his town as a child. He experienced the problems of climate disruptions first hand during his childhood and developed a passion for contributing to this problem’s solution. He has now spent more than 14 years in the field of climate change both in public and private sector in multiple roles – from drafting renewable energy plan for India in 2012, to modeling emissions for the Paris Climate Accord for India and advising multiple governments. Of late, he worked with Al Gore before coming to Stanford for his MBA and Masters in Climate Science dual degree program. He wants to bring the same level of empathy to ClimateAi’s work with farmers and agribusinesses globally.
I asked Himanshu about the purpose and mission of ClimateAi. Behind ClimateAi’s mission is a realization that even if we achieve a warming outcome of 2°Celsius, supply chains are grossly unprepared for the devastating impacts of extreme weather events, as evidenced by the Texas freeze event in 2020 and Pacific Northwest heat dome in 2021.
He said, “ClimateAi’s mission is to climate-proof global economies and supply chains, while aiming for zero loss of lives, livelihoods, and nature.” They began by deploying their platform in food supply chains with some of the largest food and agriculture companies with a goal to “climate-proof” a half-billion acres around the world by 2024 — deploying their AI-driven climate adaptation insights and decision recommendations for farmers, companies, and governments across the world.
By “climate-proofing,” they mean using their innovative AI-enhanced forecasting that more accurately and reliably predicts extreme weather out two weeks and beyond as compared to conventional models. The ClimateAi platform takes into account the changing climate, and also provides accurate, actionable analyses and decision-making recommendations for everyday operations and long-term strategy, in order to manage volatility, increase market share, and reduce costs.
“So far the platform has been deployed with many companies in food and agriculture, including Driscolls, UPL, Nuveen, Wonderful, and Oceanspray. Fifteen companies in food and agriculture alone use the tool across 42 crops in 16 countries — indirectly impacting over 15 million farmers and agricultural workers,” he said.
ClimateAi is taking supply chain management from reactive to predictive. The technology helps food and agri-input companies understand and reduce the volatility of their market demand for inputs and the supply of crops in the short term and long term through actionable insights. It also helps those companies support the farmers they work with by deploying our platform with the farmers they source from. After the recent Russia-Ukraine crisis, they have started working with those neighboring governments to secure food supplies for their countries in the short- to long-term.
I wanted to know one of Himanshu’s favourite examples to show how their system can give accurate and valuable predictions to companies on how to adapt to climate. In a trial with one of the largest seed companies in the world, they were tasked with identifying suitable production locations for newly developed seed varieties in India.
Typically, seed trials take about 3-5 years, because seed companies test these varieties in multiple locations across several growing seasons based on historical climate patterns. They collect soil data, track weather conditions, and measure yield to figure out the best location for the new type of seed, like a heat-resistant vegetable seed or a drought-resistant fruit seed, as examples. It further takes 10 years to commercialize those seeds in new markets. However, even before the seeds are launched, after the companies have identified the optimal locations, the weather conditions and climate patterns have shifted due to climate change. Meanwhile, farmers with unadapted seed varieties are unable to produce sufficient yield, resulting in losses for their farms and families, especially in developing countries like India.
With the data provided from the seed company, the ClimateAi tool identified two optimal locations in India for one specific seed variety. “Little did we know, the seed company had actually been using this trial as a test for our technology — it had already spent several years in trials, trying to identify locations, and had determined that the exact locations we identified were indeed the best. We were able to accomplish in a few hours what the company had worked on for several years, at 10% of the cost. They immediately signed with us, and wondered why they hadn’t started working with us years before, “ Himanshu explained.
In addition, another customer, Advanta, an Australian seed company and UPL subsidiary, used ClimateAi tools to inform climate-driven product placement. With their precipitation forecast, they decided to package and move inventory to a key market weeks before their competitors knew rainfall was coming, helping them capture a 5-10% increase in sales.
We also discussed if the ClimateAi can help businesses anticipate demand in the face of natural disasters. As Himanshu pointed out, “We can’t predict the future, but we can forecast risks.” No company wants to be left flat-footed when disaster strikes — they want to provide products and services to help their customers recover as fast as possible, as well as maintain profits. For example, during Hurricane Harvey in Texas in 2017, an estimated 190,000 homes were damaged or destroyed within a week — that is double the amount of new homes built every year in Texas.
With one of the roofing shingles companies, they are combining their historical sales data with ClimateAi’s hurricane forecast index to determine the key geographic markets that would face property damage from these storms. The objective is to help the company optimize their sales inventory to boost revenues, build customer loyalty, and above all, help customers in hurricane-impacted regions to recover faster.
Himanshu sees what’s happening this year as just a trailer for what’s to come. I asked him what advice he had for CEO’s and Supply Chain professionals to anticipate and future-proof their business for climate.
“I recently returned from the World Economic Forum Annual Meeting in Davos, which gathered several CEO and supply chain professionals. I told them this: you don’t have to wait for climate change to impact your business and react — you ought to be proactive and prepare today,” he said.
First, CEOs must assess their supply chains: collect information on their markets, products, your suppliers, and their suppliers, in order to create a global map of their supply network. Once they have this map, they’ll be able to see the stress points. They have to conduct climate stress tests now in order to reduce the stress on their business in the future.
Extreme weather events like the PNW heat dome and Texas freeze are stark reminders of how climate change can wipe out balance sheets. But at ClimateAi, they are already seeing through their customers how much forecasting and preparation can help before these events and in their day-to-day operations.
In closing he said, “The cost of inaction in the future is far greater than the cost of action today. A report by Global Commission on Adaptation states that every dollar invested in climate adaptation yields eight dollars in benefits. That’s a quadruple return on investment — no other investment can earn that.”