BlackRock (BLK) CEO Larry Fink — whose firm controls nearly $8.68 trillion in assets — confronted peers in the private sector two weeks ago when he demanded all companies release plans to reach net-zero carbon emissions by 2050. The call to action came a year after Fink said climate change will be “a defining factor” in the long-term viability of firms.
A similarly urgent warning came last month from the World Economic Forum, host of the annual meeting of global business and government elites in Davos, Switzerland, which called on major institutions to “act fast.”
In a new interview, Sara Menker — a former Morgan Stanley commodities trader who founded a data firm that tracks the agricultural sector — warned that business disruptions caused by unusual weather events will grow more frequent as climate change worsens. These calamities may heighten costs and drive up prices in all industries, and such effects will certainly come to pass in food markets, she said.
“You're having multiple types of disruptions happening much faster than they ever did before,” says Menker, the founder and CEO of Gro Intelligence. “That's going to impact industry at sort of an unprecedented rate.”
“This is everything from hurricanes to droughts to wildfires to storms,” she adds. “The pace at which this is growing is just huge — and this is happening everywhere in the world.”
The cost of climate change
Last year, wildfires across the West Coast and hurricanes in the Gulf of Mexico contributed to a new U.S. annual record of 22 weather or climate disaster events with losses exceeding $1 billion each, according to data compiled by the National Oceanic and Atmospheric Administration. The extreme weather last year significantly outpaced the prior annual record of 16 such events, which took place in 2011 and 2017, the federal agency said.
A report released two years ago by the advocacy group Climate Disclosure Project found that 215 of the world’s largest companies — such as Apple (AAPL) and JPMorgan Chase (JPM) — expect a cumulative cost of $1 trillion over the next five years in damages tied to climate change.
“Does that all just mean higher prices for food, along with other things? Potentially,” Menker says. “But it definitely can be tied to food inflation.”
Soon after the onset of the pandemic last year, the global food supply chain suffered a shock as some of the world’s top grain-producing nations imposed export controls that kept the product within their borders. Meanwhile, demand rose in countries like China that needed grain to support expanding livestock production. As a result, food prices spiked nearly 20% last year, the World Bank says.
“If you constantly have supply disruptions, then food prices go up. Last year, we had supply and demand disruptions, which just caused a huge skyrocketing of prices.”
Menker spoke to Yahoo Finance Editor-in-Chief Andy Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
Born and raised in Ethiopia, Menker moved to the United States for college at Mt. Holyoke and later received a master’s degree in business administration from Columbia University. She worked as a commodities trader at Morgan Stanley for eight years, but left in 2012 to improve the quality and accessibility of data in the agricultural sector.
Two years later, she launched Gro Intelligence, which aggregates thousands of data sources to model conditions that affect global agricultural output, such as drought and floods.
Speaking with Yahoo Finance, Menker said the protectionist policies last year that rocked the food supply chain will likely worsen as climate change exacerbates global instability.
“More uncertainty means more protectionism,” she says.