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Extreme heat and worker health: the cost to employers

Heat already cuts work capacity in Brazil, and the country's rules spell out what each employer must assess and do

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10 min
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Takter Insights
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Extreme heat already weighs on employers' accounts in Brazil. According to the Brazil data sheet of the 2025 Lancet Countdown, potential labor losses caused by heat reached US$17.66 billion in 2024, equivalent to 0.8% of GDP, concentrated in construction (34%) and agriculture (28%). For employers, the cost shows up as lower productivity, sick leave, injuries, and labor liabilities, and Brazil's occupational health rules already say what an employer must do to reduce it.

The issue tends to stay out of climate risk planning. Companies protect buildings, inventory, and supply chains against floods and drought, and leave worker health to another department. Talia Varley, a physician at Cleveland Clinic, argued in Harvard Business Review in July 2024 that this split leaves out the asset most exposed to climate: people.

Five fronts organize the response: a risk audit, warnings before the event, the measures the rules require, mental health, and disclosure to investors.

How much does extreme heat cost an employer?

More than the national figure suggests, because part of the cost is never booked as a heat cost. Globally, the International Labour Organization (ILO) estimates that more than 2.4 billion workers, out of a workforce of 3.4 billion, are exposed to excessive heat at some point in their work. According to the ILO's April 2024 report, based on 2020 data, that share rose from 65.5% in 2000 to 70.9%, and excessive heat accounts for 22.87 million occupational injuries and 18,970 deaths a year.

In Brazil, construction and agriculture make up more than 60% of the labor losses measured by the Lancet Countdown, because they concentrate physical work outdoors. Plants with furnaces, boilers, and industrial kitchens carry the same exposure indoors.

Varley breaks the employer's cost into four accounts: health care, performance and engagement, injuries and disability, and labor availability. Workplace safety indicators usually capture only the third. The others are spread across productivity, the health plan, and turnover, which is why they rarely enter a company's climate risk calculation.

The climate and health audit

Varley suggests starting from the map the company already has. Where a physical asset is exposed to floods, drought, or heat, the people who work there are exposed too, and an emergency plan built for equipment can be adapted for evacuating and communicating with staff. In companies with dispersed operations, the map breaks down by region, by activity, and by each location's history of extreme events.

In Brazil, the rules already give this assessment its shape. Annex III of NR-9, the Ministry of Labor and Employment's regulatory standard on physical agents, covers heat wherever workers are exposed to it, as part of the risk management program (PGR) that the general standard, NR-1, requires of every employer. The preliminary assessment considers, among other points, the job functions and number of workers exposed, the time spent on each activity, the metabolic rate of the work, and the health records the company already holds. When that is not enough to decide, measurement follows the method of Fundacentro, the ministry's occupational safety research body, using the Wet Bulb Globe Temperature (WBGT) index.

What to do: cross the climate risk map of your assets with the PGR risk inventory, site by site, and list the functions that involve physical work outdoors or near heat sources. For each one, record the headcount, the working hours, and the date of the last heat assessment.

Warnings before the event

The measures that prevent heat injury depend on lead time: scheduled breaks, available water, and heavy tasks moved to the morning have to be decided before a heat wave arrives. Varley recommends treating these risks the way companies already treat security threats, with an alert system and someone responsible for monitoring it and acting on it.

Brazil now has a public signal for that system. Since October 1, 2025, Defesa Civil Alerta, a cell broadcast service run by the telecom regulator Anatel with the national civil defense agency and mobile carriers, has covered the whole country: the message pops up on the screen of phones connected to 4G and 5G networks in areas at risk. The warning reaches the worker, and the company still has to turn it into an operating decision.

A company's own system that locates employees to warn them handles location data and often health data. Brazil's data protection law (LGPD) classifies health data as sensitive. Varley recommends the rigor of any employee monitoring program: transparency, voluntary opt-in where appropriate, data minimization, and secure storage.

What to do: assign someone to follow the warnings from the National Institute of Meteorology (INMET) and civil defense for each site, and define what changes in the operation at each warning level: hours, breaks, and suspended tasks. Write the procedure into the PGR, with an owner and a backup.

What the public sector has tested, and NR-15

A city government program in Central Texas shows what prevention can achieve. A study published in the Journal of Occupational and Environmental Medicine in 2024 followed 329 outdoor workers from 2011 to 2019. With training, acclimatization, and medical surveillance, the rate of heat-related illness fell from 19.5 per 1,000 workers in the program's first four years to 1.01 per 1,000 from 2015 to 2017. In 2018 and 2019, without medical surveillance, it rose to 7.6 per 1,000.

In Brazil, two standards address heat with different purposes. Annex 3 of NR-15 defines when an activity is classified as unhealthy, which entitles the worker to a hazard pay premium, and it does not apply to outdoor work without an artificial heat source. A farm or construction worker exposed only to the sun falls outside it.

Annex III of NR-9 covers those activities. When the action level is exceeded, the employer adopts at least one of two measures: it provides cool drinking water and encourages people to drink it, or it schedules the heaviest work, above 414 watts, for the cooler periods of the day. Above the exposure limit, it adjusts processes, rotates tasks, or provides access to cooler spots for breaks, including in open areas far from buildings, a rule revised by a ministry ordinance in January 2026. The same annex covers acclimatization and emergency procedures.

What to do: check that the PGR for every site with outdoor work includes the NR-9 Annex III heat assessment, in addition to the NR-15 hazard pay report. Where exposure exceeds the action level, schedule acclimatization for workers new to the job and medical surveillance, the component whose removal drove the rate back up in the Texas study.

Workforce mental health

Climate events also affect mental health, and the effect reaches people who lost nothing. The PAMPA cohort, which follows adults in the state of Rio Grande do Sul, surveyed 2,494 people between September and November 2024, months after the May floods that hit the state. According to the article published in Cadernos de Saúde Pública in 2026, 24.1% had moderate to severe anxiety symptoms, against 17.7% expected, and 14.6% had depressive symptoms, against 8.5%. Displaced participants had a 24% higher prevalence of anxiety and a 32% higher prevalence of depression than the others, after the study's adjustments.

Since May 26, 2026, the risk management chapter of NR-1 has included work-related psychosocial risk factors, after a one-year postponement. An extreme event that overloads the teams keeping operations running, or that changes how work is organized for weeks, belongs in that inventory.

What to do: after every extreme event that hits a site, add to the PGR an assessment of the psychosocial factors for the affected team and for the teams that covered its work. Offer psychological support through the health plan or the employee assistance program, with the offer deadline set before the event.

The risk in disclosure: CVM Resolution 193 and IFRS S2

In October 2023, Resolution 193 of the Brazilian Securities and Exchange Commission (CVM) brought the International Sustainability Standards Board (ISSB) standards, IFRS S1 and the climate standard IFRS S2, into Brazilian rules, and made the report mandatory for listed companies from fiscal year 2026. CVM Resolution 244, of May 29, 2026, changed course and made the report voluntary. Starting January 1, 2027, a listed company that does not publish it must issue a market notice with management's reasons, and a company that adopts it must keep publishing for at least three consecutive fiscal years.

IFRS S2 addresses physical climate risks, both acute ones, driven by events such as a heat wave, and chronic ones, driven by long-term shifts, and asks for the amount and percentage of assets or business activities vulnerable to them. An outdoor operation that loses work hours to heat falls into that count. Varley reviewed the sustainability reports of the 100 largest US companies and found few with quantitative data on health and safety in the face of climate change, and many without year-over-year comparisons.

What to do: prepare the 2027 report, or the notice explaining the decision not to publish one, with the audit's figures: the exposed sites and functions, the hours and sick leave linked to heat and extreme events, and the measures taken, compared year over year.

Conclusion

Extreme heat already reduces work capacity in Brazil, and the response relies on tools employers already know: the PGR risk inventory, the emergency plan, medical surveillance, and investor disclosure. The work lies in connecting those pieces to the climate risk map, site by site, and in measuring the result year over year. The first step is the audit: which functions are exposed, where, and for how long.

Sustenext ESG Platform® brings an organization's ESG data into a single source, with the risk matrix, controls, and action plans linked to ESG commitments, and generates GRI and Integrated Reporting reports, with support for IFRS S1 and S2, from that data. To build a climate and health audit for your organization, talk to Takter.

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