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Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global.

Esther Whieldon: And I'm Esther Whieldon, a senior writer on the Sustainable1 Thought Leadership Team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast where Esther and I take you inside the environmental, social and governance issues that are shaping the rapidly evolving sustainability landscape.

Extreme weather events have been making headlines in 2025 with devastating wildfires in the Los Angeles area resulting in dozens of deaths and billions of dollars in damages. This comes after several major weather events in 2024, including Hurricanes Helene and Milton in the U.S., catastrophic flooding in Spain and typhoons in the Philippines. That's just to name a few examples.

Esther Whieldon: A new report from the EU's Copernicus Climate Change Service finds that 2024 was the hottest year on record. Copernicus provides information about the climate in Europe and the rest of the world. Copernicus is the EU's Earth Observation program. The organization is implemented by the European Centre for Medium-Range Weather Forecasts on behalf of the European Commission. And that center is an independent intergovernmental organization serving its member and cooperating states and the broader community.

Lindsey Hall: This latest report finds that rising greenhouse gas levels in 2024, combined with higher air and sea surface temperatures, contributed to extreme events, including floods, heat waves and wildfires. This report has made headlines around the world. And so today, we're diving in with more detail.

Our colleague, Jennifer Laidlaw, spoke to one of the scientists behind the report. Jennifer is a senior writer on the Thought Leadership Team at S&P Global Sustainable1 and a regular contributor to this podcast. So Jennifer, what can you tell us?

Jennifer Laidlaw: Well, one of the more alarming findings of the report is that average global temperatures in 2024 were higher than 1.5 degrees Celsius above pre-industrial levels, the global warming limit set in the 2015 Paris Agreement on climate change. Now scientists have warned that beyond that threshold, climate hazards like tropical cyclones, wildfires, heat waves, drought and flooding will likely increase in intensity and frequency.

Lindsey Hall: And this topic of how climate impacts are affecting corporations and society is something we've been examining in detail at S&P Global Sustainable1. As the damage from extreme weather events becomes more apparent, companies face increasingly significant financial costs from climate hazards on corporate assets in different sectors and geographies. We'll include a link in our show notes to some of the research we've done using the S&P Global Sustainable1 Physical Risk Dataset.

Jennifer Laidlaw: To find out more about how global warming is contributing to extreme weather events, I spoke to Julien Nicolas, Senior Scientist at the Copernicus Climate Change Service. You'll hear him mention NOAA at one point. That's the U.S. National Oceanic and Atmospheric Administration. He also talks about COP. That's the big UN climate conference of the parties that takes place once a year. Here's our conversation.

Jennifer Laidlaw: Thank you very much, Julien, for joining us to talk about this report. One of the things the report said was that temperature rises had reached the limits of the Paris goal on climate change. And I'm just wondering, how much should we be worried about this?

Julien Nicolas: Well, so first, thank you for having me. It's a pleasure to talk to you today. How much should we be worried? It's -- what we saw in 2024 and in 2023 before that, it's clearly a strong sign of warning that the climate is warming and is warming rapidly. And we are closing in on this 1.5 degrees Celsius limit set by the Paris Agreement. That's the most ambitious limit set by the Paris Agreement. The goal of the Paris Agreement is to keep the global average temperature well below 2 degrees Celsius above the pre-industrial level and ideally below 1.5.

So 2024 was the first calendar year to exceed the 1.5-degree mark above the pre-industrial level. It doesn't mean that we have breached the limit set by the Paris Agreement because this limit applies to a long-term average, so typically, 20 years. But again, it's a strong reminder that we are getting close to that limit and that the window for climate actions to cut greenhouse gas emissions is narrowing.

The limit set by the Paris Agreement, but we have to keep in mind, why does it matter? It's really because of all the climate impact and the increased climate risks that we are seeing around the world in 2024, but for many years already. And that as the climate continues to warm, we are seeing these climate impacts and risks getting worse and worse. So I think it's really urgent to take climate actions and cut greenhouse gas emissions, which are really the main drivers behind this record temperature.

Jennifer Laidlaw: Right. And what's the kind of outlook for the years to come with these limits? I mean what are you expecting, for example, this year and in the shorter term, but over the longer term as well?

Julien Nicolas: Perhaps starting with the short term, what we can expect for 2025, for example, we are starting the year in a different place from where we were a year ago. So a big part of the story of the 2023, 2024 was the strong El Niño event that took place in the equatorial Pacific. So El Niño conditions are typically associated with warmer-than-average temperatures in that part of the world. And these warmer-than-average temperatures or ocean surface temperatures, I should say, they tend to give a temporary boost to the global average temperature. So that was one of the factors that can explain some of the record temperature that we have seen over the past couple of years.

I think there are other factors that played a role, but El Niño was one of them. So the El Niño event ended a few months ago. And for a few months, we were in what we call neutral conditions. So that's between El Niño and the opposite phenomenon, which is La Niña, where the sea surface temperature in the equatorial Pacific are colder than average.

And NOAA just announced a few days ago that we were -- at least as of the end of 2024, we were in La Niña conditions. So these conditions tend to have a break, if you will, on the global average temperature. So with that in mind, we don't expect 2025 to be as warm as 2024 or even 2023, so slightly cooler, but very likely among the warmest year on record even if we don't reach the record levels of 2023 or 2024.

Looking further into the future and going back to the limit set by the Paris Agreement, it's becoming increasingly likely that we will overshoot this target at some point during the 2030s. As the climate continue to warm and as global greenhouse gas emissions continue to increase, unless global greenhouse gas emissions are cut rapidly and we reached net-zero emissions quickly, again, it's very likely that this limit will be exceeded at some point in the next decade. That's the long-term context. That's what we can expect for the next decade or so.

And as the climate continues to warm, we can expect the climate impacts to worsen, if you will. So with every additional degrees of warming, we expect extreme climate events and extreme climate impacts to become more frequent and more intense such as with heat waves or extreme rainfall events, droughts, tropical cyclones. So that's really the warmer world in which we are living in already and that we also need to adapt. I think there's -- cutting emissions is one thing, but we also need to adapt this to this warmer world.

Jennifer Laidlaw: What kind of steps do you think we need to take to address these impacts that we're seeing from climate change?

Julien Nicolas: I think there are 2 things. The first thing is address the root cause behind this long-term warming, which are the greenhouse gas concentration keeps increasing. So cutting greenhouse gas emissions from human activities is the top priority. That's the main goal behind all the climate talks that take place every year at conferences. So that's really the most urgent things to do if we want to limit the long-term temperature rise is really cutting greenhouse gas emissions and reaching net-zero emissions as quickly as possible.

The other thing is we are already living in a warmer world with an increased frequency of extreme climate events. And these extreme climate events are becoming not only more frequent, but more intense. So we need also to adapt to this warmer world. So adaptation is really another key aspect of addressing the impact of climate change, is building more resilient communities, is really facing some of the climate change that we are seeing, whether it is related to extreme climate events such as heat waves, extreme rainfall event, tropical cyclones, but there's also the slower-changing aspect of the climate such as sea level rise or the melting of glaciers. I think they don't always make headlines, but the long-term consequences are, nonetheless, quite important for a large part of the population around the world.

Jennifer Laidlaw: We're seeing, like, some very bad extreme weather events at the moment, for example, in California with the wildfires. You also had in Europe and Spain, end of October, we had these terrible floods. How much can we attribute that to climate change?

Julien Nicolas: In general, and many studies have clearly shown the link between these extreme climate events, and/or at least most of them, and any climate change. And in general, climate change or the warming of the climate make extreme climate events more likely and more intense. We can't tell, for sure, for all extreme climate events that are happening around the world. Sometimes the link is a bit less clear, but typically, for each waves, for example, the link is very clear and straightforward.

For some rainfall event, sometimes we can't tell precisely to what extent the -- so climate change has made some events more likely. But in general, using this example of extreme rainfall event, we know that as the air warms, it can hold more moisture. And then when it rains, it pours, and that this is where we can see what were previously already heavy rainfall events becoming more extreme and causing the kind of damages that we saw in Spain a few months ago.

And on the other side, and that was going back to what is happening in California at the moment, is as the air warms, it is also sucking up more moisture from the ground, which is drying up soils faster than before, which can lead to soil drying up and more -- drier conditions happening more quickly. That's the kind of aspect of how climate change is really impacting the different types of environment around the world.

Jennifer Laidlaw: Right. Okay. And was there anything -- particularly in the report that you just put out, is there anything particularly that maybe stood out for you in terms of how you see climate change affecting the weather and how it's aggravating these extreme weather events?

Julien Nicolas: The impact of climate change are many. I think from heat wave to extreme rainfalls, to tropical cyclone, to sea level, to glacier melting, I think there's virtually no part of the world that is being spared by this. And that also requires different types of adaptations, measures and policies.

But some regions really are experiencing compounding effect of climate change. And I can use the example of the Mediterranean region. And I think to some extent, that can be true for part of the Western U.S. as well such as California as we see both climate change leading to more extreme temperatures, so more extreme heat stress during heat waves, more prolonged droughts, but also more extreme rainfall event in the same regions. So that's typically what happened in Spain. There was really this combination of dry conditions and then followed by extreme rainfall that lead to this catastrophic flooding.

So some regions really are more exposed or are becoming quite vulnerable due to this really compounding effect of climate change where multiple types of climate impacts can lead to fairly devastating consequences in some cases. I think it's really difficult to pinpoint one particular region that is being more affected than others.

And what we saw again in 2024, but in previous years as well is really, many types of extreme weather events or climate change impacts hitting many parts of the world, looking at the example of Africa where there was an extended drought followed by extreme rainfall, the climate change impact can take different shapes, whether it's in the Arctic with the thawing of permafrost or the drying out of soils in warmer climates or some extreme rainfall event, whether it's in Europe or related to cyclone as we saw with Hurricanes Helene and Milton in the U.S. So that's also one of the challenges is that we are being faced with all these different types of extreme events that climate change is bringing with it.

Jennifer Laidlaw: Yes. And I guess it's like you said, what do we need to implement to make sure that we can adapt to this changing climate, right?

Julien Nicolas: Yes, absolutely. And perhaps when thinking about which region is being more affected, it's really how resilient are the communities that are being affected. And this is what can explain the difference in the severity of the impacts is whether some extreme event happened in a country that has robust infrastructure and is relatively resilient overall versus other countries that are much more vulnerable with where the poverty level is much higher. So that's really what leads to quite different consequences sometimes, even though the extreme event can be the same.

Jennifer Laidlaw: And is that something that you saw, like, in your report? I mean were you saying like some communities were more resilient, so they were able to, like, withstand better the effects of climate change?

Julien Nicolas: That's one aspect that we didn't study in details in the report. I think the report is really about the main highlights for the year. We are publishing in April a more detailed -- as we do every year, a more detailed climate report about Europe in 2024. It's the European State of the Climate report.

I was seeing this when thinking about how Europe or the U.S. can deal with climate change versus some part of Africa, for example, or Asia where the poverty level is much higher and where the infrastructure are quite different. So -- and when it's some population that are much more exposed to some extreme events that we are seeing.

Jennifer Laidlaw: Is there anything else about the report or about how you're seeing climate change and extreme weather events that we maybe haven't touched upon that you think is important?

Julien Nicolas: Perhaps one last word about the Paris Agreement. As I said, it's becoming increasingly likely that we'll probably overshoot the limit -- the 1.5-degree limit at some point in the next decade, but it's important to keep in mind that it doesn't mean that this limit of the Paris Agreement is broken when we do so. I think it's important to keep in mind that this limit is important as a focal point for climate action and that every fraction of a degree matters, every additional warming is bad for the planet essentially.

So even if at some point, we overshoot this target, I think we need to continue to pursue efforts to cut global emissions and bring the temperature below 1.5 degrees. I think that's really probably the main message that I usually say is that we need to keep this target alive and continue to do everything we can to cut greenhouse gas emissions and limit the long-term temperature rise.

Jennifer Laidlaw: Okay. Great. Well, thank you very much for joining us.

Julien Nicolas: You're very welcome. It's a pleasure.

Lindsey Hall: So today, we heard how global average temperatures exceeded the 1.5 degrees Celsius limit set out in the Paris Agreement on climate change, and that really drives home the urgency of the climate crisis. Although, as Julien says, this doesn't yet mean the agreement has been breached as it's a long-term target, but it does signal the need to step up action on reducing emissions.

Jennifer Laidlaw: Yes. And we heard about the importance of adaptation and resilience of countries and communities to prepare for ever-increasing extreme weather events. One of the challenges is that every region in the world is affected by a warming climate, with populations being impacted differently depending on poverty levels and the robustness of existing infrastructure.

Lindsey Hall: Well, thanks, Jennifer, for coming in to talk to us about the report today.

Jennifer Laidlaw: Always a pleasure. Thanks for having me.

Esther Whieldon: Please stay tuned as we continue tracking how climate change is reshaping the risk landscape. And please check out our show notes for a link to register for our upcoming live podcast event in New York City on February 6. We'll be celebrating our 7-year podcast anniversary with an in-person recording session, a big relaunch, networking, and we'll be unveiling our new podcast name. You don't want to miss it.

Lindsey Hall: Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, please subscribe, share and leave us a review wherever you get your podcast.

Esther Whieldon: And a special thanks to our agency partner, The 199. See you next time.

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