What the ‘Super El Niño’ and Climate Volatility Mean for Growing Business Risk

El Niño is a weather pattern many of us have heard of, but rarely stop to think about, until it starts affecting our daily lives. This year, El Niño conditions have developed, with some commentators referring to the potential for a “super El Niño” if the event strengthens further later in the year. While the exact impacts will vary by region, the potential effects are already prompting businesses to think more carefully about climate volatility, supply chain resilience and energy systems. 

El Niño is a naturally occurring climate pattern, driven by unusually warm sea surface temperatures in the Pacific Ocean. While the cause may seem remote, the effects are anything but. These shifts influence global weather systems, increasing the likelihood of more extreme and less predictable conditions, hotter temperatures in some regions, heavier rainfall in others, and greater instability overall.  

The term “super El Niño” is often used informally to describe a very strong event, where the effects can become more pronounced. For the UK, El Niño’s impacts are indirect and uncertain, but it can increase the likelihood of more unsettled, wetter and windier, with the potential for much colder periods later in winter. This is in addition to the hotter, drier spells interspersed with intense rainfall that we are seeing more of due to climate change (just like the weather we have had throughout May-June so far). For businesses, this reinforces the need to plan for uncertainty that can affect operations, energy demand and resilience.  

What does this mean for energy demand? 

Too often, weather is treated as background context to business operations. But events such as El Niño expose just how dependent organisations are on stable, predictable conditions. 

From my perspective, this is less about a single climate event and more about a broader shift. Businesses are now operating in an environment where extremes are becoming more common and less predictable. 

Energy demand is one of the most immediate pressure points. As temperatures rise, cooling loads rise sharply as air conditioning, refrigeration and ventilation systems work harder and longer. Offices, healthcare settings, data centres, warehouses and retail environments all feel the strain. Even organisations that haven’t historically depended on cooling may find their energy profiles changing rapidly. 

At the same time, energy infrastructure itself can come under strain. High temperatures reduce generation efficiency and increase the risk of faults across networks. When demand spikes quickly, particularly during heatwaves, prices often follow. These periods of high demand can place upward pressure on costs, especially where they coincide with wider market or network constraints. 

This combination of higher demand and increased price volatility is where organisations become financially exposed. You need the lights on to operate, but the cost of putting those lights on can increase significantly. 

The real impact goes beyond energy costs 

Energy price exposure is only part of the story. In reality, a strong El Niño can act as a multiplier of existing business risks. 

Operational resilience can be tested as equipment, IT systems and building infrastructure are pushed beyond normal limits. Extreme or unusual weather can disrupt logistics, impact employee wellbeing and reduce productivity. Hotter working conditions raise health and safety concerns, particularly in sectors such as manufacturing, warehousing and construction. Flooding, even when localised, can interrupt operations or damage assets. 

Then there is the supply chain dimension. Extreme weather affecting transport infrastructure, production sites or international partners can create delays that ripple across operations. For organisations already dealing with tight margins and complex logistics, this adds another layer of uncertainty. 

Climate patterns like El Niño don’t just influence the weather, they expose how resilient, or fragile, our systems really are. 

A direct line to sustainability and ESG accountability 

What is changing just as rapidly is the expectation placed on businesses to understand and report these risks.  

Frameworks such as the Task Force on Climate Related Financial Disclosure (TCFD), the forthcoming UK Sustainability Reporting Standards (SRS), SECR and wider ESG reporting requirements are no longer theoretical exercises. They are increasingly shaping how organisations are evaluated by investors, regulators and stakeholders. Periods of climate volatility, including El Niño events, bring those requirements into sharper focus. 

Sudden increases in electricity consumption will affect Scope 2 emissions, particularly where demand rises to support cooling. Any additional on-site fuel use, such as backup generation, may also affect Scope 1 emissions. Disruptions across supply chains may influence Scope 3 emissions, often in ways that are harder to predict and control. 

At the same time, organisations are expected to disclose their exposure to physical climate risks. Heatwaves, flooding and infrastructure stress are no longer future scenarios, they are immediate considerations that need to be reflected in climate risk assessments. 

Even performance metrics, such as energy intensity or carbon reduction progress, can be skewed by these external pressures. Without clear context and transparent reporting, stakeholders may struggle to distinguish between structural inefficiencies and climate driven impacts. 

While El Niño itself can’t be prevented, its impacts can be managed. For businesses, this is a timely moment to review energy strategies and resilience plans. Understanding when and where energy is used, identifying inefficiencies, and stress testing operations against extreme conditions can make a real difference. 

Simple steps, such as optimising building controls, improving insulation, or reviewing maintenance schedules for cooling systems, can help reduce exposure to sudden spikes in demand. More strategic actions, like on site generation, energy storage or demand side response, can also provide valuable flexibility during periods of stress on the grid. 

Integrating Resilience into Strategy and Reporting 

One area I believe still needs greater focus is integration. Energy management, sustainability strategy and risk management are often treated as separate conversations. In reality, they are deeply interconnected, particularly in the context of climate volatility. 

El Niño and similar climate volatility scenarios are exactly the kind of conditions that should be reflected in TCFD aligned scenario analysis. How does the organisation perform under prolonged heat? What are the cost implications? Where are the vulnerabilities? 

Clear governance, robust data and consistent reporting processes are essential. This not only supports compliance with sustainability reporting and ESG disclosures but also builds confidence with stakeholders that risks are being actively managed. 

Looking Ahead 

It would be easy to frame El Niño as a short-term challenge, a difficult season to navigate before returning to normal conditions, but I don’t think that is the right perspective.  

Whether or not this develops into what some are calling a ‘super El Niño’, the wider lesson for businesses is clear, climate volatility is becoming a core operational and financial risk. 

This event is unfolding against a backdrop of long-term climate change, which is raising baseline temperatures and increasing the frequency of extremes. It highlights just how exposed businesses are to climate variability, how quickly conditions can change, and how important it is to build resilience into core operations. It also reinforces the need for credible, transparent sustainability reporting that reflects real world conditions. 

The organisations that respond decisively, by improving efficiency, strengthening resilience and embedding climate risk into decision making, will not only navigate this period more effectively, but will be better prepared for what comes next. 

Because if there is one thing we can say with confidence, it is that climate volatility is no longer a distant risk, and businesses need to be ready for what comes next. 

Ends

Editors notes

About TEAM

TEAM is an energy and sustainability consultancy. It helps organisations with large energy estates reduce consumption and carbon emissions to save money and meet commercial and compliance targets on their journey to net zero.

Founded in 1985, it has a long history of helping customers navigate changing definitions and certification standards. TEAM Energy is an Employee Ownership Trust (EOT), with employees having a direct stake in its customers’ success.

www.teamenergy.com

Tim Holman – Head of Consultancy, MSc, MEng, CEng, MEI

Tim directs TEAM’s consultancy practice, applying 25+ years in strategy, audits, metering, and compliance to deliver robust, audit‑ready results for customers. A Chartered Energy Engineer and Member of the Energy Institute, Tim holds an MSc in Energy Conservation and the Environment from Cranfield University and an MEng in Mechanical Engineering from the University of Salford.