Think it’s hot now? The next five years will smash records, U.N. says

The market implication is not just “more disasters,” but a step-change in the volatility regime for physical supply chains. Repeated heat/drought/flood shocks raise inventory carrying costs, widen regional basis differentials, and increase the probability of episodic price spikes in food, power, insurance, and freight that are hard for sell-side models to smooth away. The underappreciated second-order effect is that firms with just-in-time supply chains and low pricing power will see margin compression from both higher operating disruption and higher working capital needs, while asset-light platforms can actually benefit from more frequent repricing.

The biggest structural winner is not generic “green” exposure, but adaptation spend: grid hardening, cooling, water management, and wildfire mitigation. This supports multi-year demand for electrical equipment, HVAC, pumps, leak detection, stormwater, and catastrophe-response services even if headline climate policy stalls. On the loser side, agriculture input chains, reinsurers, and travel/leisure are exposed to compounding correlation risk: when heat, drought, and flood hit simultaneously, diversification assumptions break and losses cluster across geographies.

The contrarian read is that consensus still underprices duration. The obvious trade is to buy clean-energy beneficiaries, but policy subsidies are already crowded; the less crowded edge is to own the “picks and shovels” of resilience and short the most capital-intensive laggards with weak balance sheets. A key catalyst window is the next 1-3 months: if forecasted extreme weather coincides with another price spike in food or power, management teams will likely guide up capex and down margins faster than analysts can cut numbers, creating a tradable earnings season dispersion event.