Commentary: Extreme weather risk is scaring big firms away from poor countries

Multinational companies are increasingly factoring climate hazards into decisions about where to invest, and evidence suggests they invest less in countries that are more vulnerable. This matters because poorer countries often have fewer resources to prepare for extreme weather or recover from it, while reduced foreign investment can limit jobs and access to new technologies.

An analysis of 159 countries found that each one-point rise in climate vulnerability on a 100-point scale was associated with 12 per cent less foreign direct investment, after accounting for other factors. Examples include delayed or suspended data-centre projects in Chile and Kenya amid concerns about water, alongside flood damage to infrastructure in Vietnam and factory shutdowns in Thailand. The article notes that companies also risk missing business opportunities in emerging markets when they pull back.