An AI Startup Takes Us Inside the Business of Climate Resilience

Climate change demands climate action. Add artificial intelligence to the problem-solving portfolio, and technology is helping businesses adapt to an increasingly hotter planet. In industry lingo, this is called climate resilience.

To understand this emerging field, Wharton Global Youth explored the intersection of climate change, AI, and business resilience with a startup company among the 2024 innovators selected for the Cypher Accelerator at Wharton’s Stevens Center for Innovation in Finance.

Eoliann, founded in Italy in 2022, uses machine learning and earth observation data to quantify climate risks for businesses and financial institutions. Eoliann’s tagline: Building climate resilience from the sky.

We caught up with Federico D’Albenzio, Eoliann’s business developer, to learn about the company’s software, which provides detailed, quantitative analyses of exposure to climate risks like floods and hurricanes, and how AI supports that work.

Federico, what are three things we need to understand about the business of climate resilience?

Feeling exposed. As temperatures rise, businesses are adapting to survive.  For example, banks need to assess the exposure of their credit portfolios to climate risk to know if it is safe to loan money to certain clients. “Climate risk is the potential exposure of a physical asset (i.e., industrial facilities, residential buildings, agricultural fields) to extreme events, such as floods, wildfires and hurricanes,” says D’Albenzio. “We can still save the planet, but we have to adapt to it. That means we need to understand how these phenomena will change our lives. We need to be prepared to mitigate the risks.”

Data-driven decisions. Eoliann provides quantitative data on the probability, intensity and vulnerability of assets to floods and other climate-related threats. Banks, for example, can then make informed decisions about providing loans (or not, if the risk is too high) and encourage clients to take actions that will mitigate their climate risk. Eoliann uses AI to process the huge volumes of data it receives from three different satellite constellations; data that is constantly updating information about the planet. “Thanks to AI, we can process this data…and we can simplify the methodologies,” notes D’Albenzio. “AI makes it possible to use data to create new models that are much more efficient compared to statistical modeling…Our founders are very technical people who studied a lot of math and physics. Then they said, ‘How can we model our reality in numbers; in technology that has an impact?’ If you have the tools to understand the reality, and you know what you want to get in the end, AI becomes an enabler to get you there.” The innovation: detailed, numbers-driven risk assessments.

Unsung climate risks. As Eoliann grows and raises funds to scale its solutions across Europe and the U.S., it is developing a deep expertise in climate-related exposures, even those that don’t get as much airtime as high-profile hurricanes and wildfires. “Droughts are climate risks [that get less attention], observes D’Albenzio. “They are potentially so impactful because they affect every part of the value chain in the end, from energy generation, to the production of agricultural crops, to water accessibility. It’s crazily important in my point of view, and right now, people are not taking droughts into account.”

Intrigued to learn more about climate risk? Tune into a recent episode of Wharton’s Ripple Effect podcast featuring Witold Henisz, vice dean and faculty director of Wharton’s ESG Initiative, who talks about “Why Climate Risk is Financial Risk.”

Conversation Starters

What is climate resilience?

How does Eoliann build climate resilience from the sky?

Federico D’Albenzio says, “We can still save the planet, but we have to adapt to it. That means we need to understand how these phenomena will change our lives.” What does he mean by this? How are you adapting to changes brought about by climate change? Share your story in the comment section of this article.

Hero Image: Ales Krivec, Unsplash+