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March 27th, 2023
A large multinational corporation with 11 divisions, including agricultural solutions, was noticing an increase in climate volatility, particularly in regards to extreme weather events and persistent drought conditions — which together were raising new concerns and creating challenges for strategic planning. The company was looking for better tools for a more uncertain world and a partnership that would jointly inform strategic decision-making.
In a trial engagement, ClimateAi was tasked with identifying suitable production locations for newly developed seed varieties in India — which would enable the company to more quickly, cost-effectively, and reliably launch new crops.
With the data the company provided, ClimateAi’s Climate Analogs Tool identified two optimal locations in India for one specific seed variety. Unbeknownst to ClimateAi, the company had actually been using the tool as a test for its own internal technology. It had already spent several years in trials to identify locations, and had come to the same conclusions as the Climate Analogs tool, which was able to accomplish in a few hours what the company had worked on for several years, at 10% of the cost.
The company was experiencing a significant output decrease in two key production regions: tomatoes in Maharashtra, India, and leeks in Fogia, Italy. As a result, the team wanted to assess climate risk exposure in these regions to understand if they’d be viable in the future using ClimateAi’s ClimateLens-Adapt tool for long-term strategic planning.
ClimateAi conducted two pilots with the company to assess climate risk exposure in these locations for the two crops. For the tomato seed, ClimateAi found that a major risk, rising temperatures, would constitute a brutal extreme heat threat that would lead to an approximately 30% output decrease in the region within 20 years. ClimateAi warned the company that the location might prove non-viable within the coming decades. They used this information to vet long-term investment strategies in the region. For leeks, they understood that this region of production was still expected to be suitable for 20 years even though risks like pest and frost were emerging, and decided to continue its investment in the region. In addition, they were able to leverage these insights to adjust production planning with more resilient seed varieties and better timing for planting, while supporting growers to deliver optimal quality. Additionally, ClimateAi’s Climate Analogs Tool identified potential alternatives for expansion for both the tomato seed and the leek.
The company was concerned about the long-term suitability of its portfolio. ClimateAi’s Climate Lens- Assess tool was able to evaluate BASF’s country-level exposure to future climate shifts. The platform can identify tipping points: when an uncommon event (with a 25% probability) becomes a common occurrence (with a 75% probability). This will happen at a future date known as the “year of departure,” at which point a fundamental shift in the average climate will occur.
ClimateAi was able to determine what percentage of their production costs would be at risk — determining that the shift begins for half of locations within 4 years. The analysis indicated that the company’s exposure is skewed towards earlier years, increasing risk. These insights inform macro production planning around market entry and help the company make risk management decisions today to cut costs across its portfolio.