Sales ruined by bad weather, tourist seasons spoiled by rain: to combat climatic hazards, a new market is springing up dealing with climate sensitivity, offering business customised analyses and even protective financial products.
Founded in 2007, METNET, a major player in this emerging market, is a subsidiary of Météo France, the Caisse des Dépôts and Nyse Euronext. It supplies businesses with studies assessing and forecasting their production needs according to weather conditions and geographical location, for example.
"We study the influence of the weather to create a behavioral model for businesses and their clients," by examining for example production peaks according to the weather over the last three years, explains Frédéric Bardoux, President of METNEXT.
This analysis can be applied to a wide range of activities, including sun cream products, fun parks and energy providers.
This is because, according to a study carried out in 2008 by the consultants Mazars, 80% of businesses are affected financially by the vagaries of the weather. Thus, during the very cold week of January 4, supermarket salt prices soared by 32% in France according to a study by the number two climate management company, Climpact, launched in 2003.
Even though the impact of the weather is indeed real, many businesses are reluctant to take this into account in their financial results, as opposed to the exchange rate risk, for example.
"Only 15 to 20% of businesses currently stipulate weather risk in their balance sheets," confims Mr. Bardoux.
Nonetheless, some companies will now go further: in addition to adapting their offering in accordance with the weather, they will protect themselves against climate risk with financial products that are traded on the Stock Exchange, called "climatic derivatives".
In this way, a company that is a large energy consumer can buy contracts that ensure a given temperature for protection in the event of lower temperatures and peaks in gas and electricity.
While not yet widespread in Europe, climatic derivatives have existed for about 12 years in the United States and are listed on the Chicago Stock Exchange. But this could soon change, as Mextnext has just created three indices linked to temperatures in Europe and is looking for a stock exchange partner.
