With climate change scrambling temperatures across the globe, new research shows that severe heatwaves are striking inhabitants unequally. However, help could be at hand: improved tools for heat risk and solution simulations, now give companies and local authorities more powerful decision-making capabilities to solve the growing challenges that they face.
Thermal inequality explained
Researchers have highlighted how large the differences in temperature can be within the same city. In Cape Town, South Africa, temperatures during one day of the summer of 2024 were measured at 41.6 degrees Celsius in the high-density city centre. In the informal settlement of Joe Slove, slightly north of the city, the temperature was the same. However, in a leafy residential area to the southeast, temperatures were strikingly comfortable with only 25 degrees Celsius[1].
The trend is similar across the globe. WRI India research has also shown that lower-income settlements are much warmer than wealthier areas. These differences are partly due to topography and cooling vegetation, but are also a result of differences in purchasing power to acquire cooling technology and of a built environment that provides sufficient shade.
The negative health effects of long lasting overheat is evident for all demographic groups, but especially the most vulnerable.
Europe also in the firing line
Europe is in no way shielded from climate change: Our continent is warming twice as fast as the rest of the globe, according to the recently launched report “The European State of the Climate (ESOTC) 2025” by the Earth observation agency Copernicus[2]. That makes Europe the fastest warming continent on Earth, with the associated hotter summers, shorter winters, melting glaciers, wildfires, and dry or flooded rivers due to changed precipitation patterns.
Urban and rural challenges
While urban heatwaves are severe, rural heatwaves may be an even bigger problem. The negative impacts of heatwaves can be measured in “person-days” which combines the number of persons affected with how many days they experience a heatwave. Rural communities in Africa already experience between 20 and 1000 “person-days”, while urban African inhabitants have less than twenty person-days annually[3]. Billions of people in Pakistan, India and Bangladesh face the same trend: Heatwaves that strike areas without electricity makes inhabitants extremely vulnerable. The probability of climate refugees increases. To counter the heat, better planning, targeted investments and heat protection is necessary both in urban and rural areas.
Data is power. The World Resources Institute (WRI) have recently launched a new tool with impressive decision-making support to plan for cooler cities. The “Cool Cities Lab” tool enables urban decision makers to “assess heat resilience in their city and understand the potential cooling impacts of a range of solutions at both neighbourhood and city scales”[4]. It gives an overview of the baseline, risks and opportunities, solutions and impacts of different measures to address urban heat. With an extremely fine granularity down to street views, the focus is on which action can be implemented on a local level. Even if there is no solution that works everywhere, some cooling solutions are effective in most cities and contexts. With the right data simulation, optimizing cost to efficiency can speed up the meaningful capital allocation.
There are numerous solutions to both urban and rural heatwaves, many of which are inexpensive. Planting trees and vegetation are effective both in farmlands and streets, rain collection and bringing rivers to the surface cool off nearby areas, smart construction like white roofs and pavements which reflect sunlight, natural ventilation, energy-efficient air-conditioning can provide heat relief for built environments.
Positioned to benefit by delivering solutions
Looking at portfolio holdings within the investment theme “urban planning” and “urban infrastructure”, several companies have the ability to deliver climate resilient solutions with nature-based solutions and energy efficient cooling solutions has been part of our portfolio since inception of our thematic solution funds. Some portfolio companies that have meaningful business segments built on solutions to heat waves are Acciona, Stantec, Sekisui House, Cury Construtore e Incorpora, Skanska, Spie, Saint-Gobain, Arcadis, Sweco and Norconsult. Key solutions include solar controlled glass, solar canopies over parking lots, heat reactive building envelope, reflective materials, urban green infrastructure, urban forests, water features, urban cooling corridors, net zero buildings, geothermal energy storage, heat recycling, district heating/cooling, and real time monitoring through “digital twins” to identify vulnerable areas.
As an investor in companies that provide urban infrastructure, encouragement to test the tool is in order. Why should companies care? Our argument is due to profitability and competitiveness. Firstly, local authorities are prone to increasingly demand that climate adaptation, among this cooling vegetation and infrastructure is part of tenders. Secondly, there is a premium on liveable areas.
The value of real estate and surrounding infrastructure is improved with higher vegetation, waterfronts, and decreased temperatures, as has been proved from the river restoration of the Cheonggyecheon river in Seoul. There, a major motorway was replaced by a previously buried river[5], resulting in temperatures being reduced by 2.5 degrees celsius and the price of land increasing by 30-50 percent for properties within 50 meters of the restoration project, a value increase twice as high as other parts of Seoul. Furthermore, the number of businesses grew by 3.5 percent in the Cheonggyecheon region after the restoration, double the rate of downtown Seoul[6].
A similar pricing premium is found in New York, where the correlation between Central Park proximity and pricing is clear and consistent. Given the extrapolation of temperature trends, the likelihood of this premium increasing rather than decreasing in the future is likely.
[1] WRI (18.03.2026), Why Some Parts of a City Are Hotter Than Others | World Resources Institute
[2] https://defence-industry-space.ec.europa.eu/europes-warming-accelerates-beyond-global-trend-new-copernicus-data-shows-2026-04-28_en
[3] The Conversation (25.04.2026), Heatwaves will be worst for rural parts of Africa – new model shows tens of millions face dangerous warming by 2100
[4] WRI Cool Cities Lab, Cool Cities
[5] https://www.coolgeography.co.uk/advanced/River_Restoration_Conservation.php
[6] https://www.landscapeperformance.org/case-study-briefs/cheonggyecheon-stream-restoration-project