📈 Check Out the New & Improved Climate Risk Signals Explorer!

Climate risk is business risk.

That simple truth drives everything we do at Climate Proof as we shine a light on the fast-emerging adaptation economy.

Understanding how businesses talk about climate risk and adaptation is essential to this mission. Climate advocates and policymakers have their own ideas on what corporations should be doing to prepare, protect, and respond to extreme weather events and climatic shifts. But the first step in holding companies accountable is knowing what they’re actually doing today to climate-proof their operations, and how they’re communicating their climate vulnerabilities to investors.

The Climate Risk Signals Explorer is a tool designed for this exact purpose. Built on the foundations of our S&P 500 Climate Risk Signals dashboard, this new and improved resource — available exclusively to Climate Proof members — highlights mentions of climate risks and adaptation efforts across five years’ worth of S&P 500 company earnings call transcripts, giving users the ability to explore how corporate conversations on these topics have evolved over time.

📖 Read on to learn how we built the Explorer, and to access the walkthrough. Not a Climate Proof member yet? Upgrade here👇

We used a set of 100+ keywords and phrases to sift through over 50,000,000 transcribed words from 18 quarters of earnings calls, extracting excerpts that relate to climate risks — like floods, storms, and heatwaves — as well as adaptive actions, like grid modernization and wildfire mitigation.

These excerpts were further processed using a finetuned AI model to filter out false positives and create a refined dataset containing only the most relevant comments. While not foolproof, this has largely eliminated those excerpts where speakers use climate or weather terms colloquially or idiomatically. (You’d be amazed how many execs use the phrase “weather the storm” to talk about non-weather related economic shocks!)

References were grouped into keyword-based categories. For instance, excerpts containing terms like “drought” or “water scarcity” were placed in the ‘Drought’ category. Some categories ended up larger than others. The ‘Adaptation’ category, in particular, includes references containing any of 87 different keywords. That’s because few companies use the phrase “climate adaptation” directly, and actual adaptation measures differ across sectors. For example, a utility might describe undergrounding power lines as an adaptation strategy — something a healthcare company wouldn’t do. Instead, healthcare firms are more likely to focus on supply chain resilience or business continuity planning.

This approach also captures adaptation references that may not relate directly to climate risks, but are likely to enhance a company’s adaptive capacity anyway. Staying with healthcare, a number of companies (unsurprisingly) spoke about upgrading their supply chains and focusing on business continuity in 2020-21, at the height of the COVID-19 pandemic. These efforts may prepare and protect these businesses from climate-related disruptions too — even though they were undertaken to combat pandemic-related ones.

Cutting and slicing the data in the Explorer is easy, as the above walkthrough shows.

A filter panel allows users to segment excerpts by Date, Company, Sector, Industry, and Keyword, while a menu in the bottom-left switches between ‘Chart’ and ‘Table’ views.

To give you even more control, we’ve included a ‘Filter Excerpts’ input bar, where you can type in your own words and phrases to drill in on specific risks, opportunities, and adaptations. Using this input, you can learn why the Utility company Xcel Energy sees “early warning capabilities” as a business opportunity, and find out which Industrial company is big on “stormwater management”.

This filter should be particularly helpful for consultants, investors, and researchers who want to pinpoint examples of big companies addressing specific adaptations or climate trends.

Our AI-powered approach to earnings call analysis allows us to scale up the Explorer quickly to meet Climate Proof members’ needs.

We could expand the dataset to encompass all companies in the Russell 1000 index, or branch out our analysis to firms listed in other countries. Perhaps we could apply a similar keyword analysis to annual reports or sustainability disclosures. The possibilities are, if not endless, certainly expansive!

But we want to know how YOU think the Explorer should evolve before plowing ahead.

So, Climate Proof members — play with the Explorer a little, talk to your colleagues about it, then take our short poll:

Not a member yet? You know what to do — smash that upgrade button now!

We hope you enjoy using the new tool. Thoughts? Feelings? Send them to [email protected].

Thanks for reading!

Louie Woodall
Editor