Guglielmo, congratulations! What drew you to study the economic effects of climate disruption?
Guglielmo Zappalà: During my PhD, I spent a summer as an intern at the International Monetary Fund (IMF). While there, I helped evaluate how climate shocks – huge and sudden disruptions to climate patterns – can change the sustainable development growth trajectories of low and middle-income countries. But these estimates never accounted for the effects of shocks in one sector or country on other areas. I realized we could combine a variety of real-world data to understand how extreme heat shocks to agriculture have consequences far beyond just crops.
How would you explain your findings to someone unfamiliar with your work?
Guglielmo: We all know the global economy is highly interconnected. This means that an event somewhere in the world is never really self-contained, and, say, an intense heat wave in one country that targets a certain crop can have detrimental consequences on downstream sectors. Take cotton crops: if they are subjected to scorching temperatures in one location, the entire global fashion industry could suffer. We can measure these connections – in my paper I call them interlinkages – between sectors. Two-thirds of the economic damage caused by extreme heat is explained by interlinkages. The remaining third is direct production losses: in my example, to the cotton industry.
A key message to understand is this: The costs of extreme heat are tremendous and they are linked. This is as true for industrial crops like cotton as it is for food crops – my dataset covers around 120 commodities. It is vital that both the public and private sector recognize the true cost of climate damage, how industries will be affected, and how these costs spread throughout the global economy. Decision-makers can rely on this information to invest in mitigation and adaptation policies, making us all better prepared for the future.
This award invites PhD candidates and postdoctoral researchers to showcase their findings on the relationship between climate change and global trade. What motivated you to submit your research?
Guglielmo: Academia and the private sector sometimes operate in silos, and this seemed like an opportunity to bring us closer together. Allianz Trade has a wealth of valuable data that can help improve analysis, and in turn, we can help examine the impact of climate change on industries and foster ties between our sectors. Then, companies like Allianz Trade can help translate what these findings mean for business.
Guglielmo’s work obviously caught Allianz Trade’s attention. Piril and Inès, why did his research stand out to you?
Piril Kadibesegil Yasar: Guglielmo’s research opens up the possibility of a new and much more precise way to determine the links between environmental performance and credit risk. By quantifying the impact of extreme heat on agriculture, we could take it into account when assessing the resilience of a supply chain, a sector, or a company. We could use this data to better understand the circular impact on other sectors and to develop new analytical criteria.
Inès Essombe: Exactly. In Guglielmo’s research, we clearly see climate change as a systemic risk for global trade. His approach, grounded in data and a clear methodology, helps us move from a theoretical view of this shift to a more refined understanding of the impacts of climate change on commercial risks.
What’s next for Allianz Trade’s partnership with Guglielmo?
Inès: We have asked Guglielmo to present his research and findings to our internal teams. We want to generate ideas about how to continue collaborating to quantify the environmental, social and governance (ESG) impacts on our credit assessments.
Piril: We have also invited Guglielmo to join the jury for the 2026 Climate Risk Award. He’ll join representatives from Université Paris Dauphine and the International Credit Insurance & Surety Association (ICISA); an internal panel of Allianz Trade experts; our Board member Florence Lecoutre; and myself.
The Allianz Climate Risk Award is an annual honor. What advice would you give to next year’s applicants to the Allianz Trade Award?
Guglielmo: As researchers, we don't always know how to convey our findings clearly. It's important to use accessible language and translate your research so it is clear why it matters for business.
Piril: On the Allianz side, we need to see how the research relates to our business and how it helps us solve climate challenges facing trade credit and global trade.
Inès: I’ll add that the jury is looking for a robust, data-driven approach. It's important to present your topic in an innovative way and for the key messages to stand out.
For researchers working today, what are the most urgent knowledge gaps in economics and global trade?
Guglielmo: We have only just scratched the surface of our understanding of the role of spatial linkages in climate impacts. Going forward, we need to consider geopolitics – our world is too interconnected to ignore it. Take the Arctic: its role may change as the climate becomes milder, and this has renewed geopolitical interest in the region.
Piril: The connection between geopolitics and regulation is really fascinating. We still need more data on the physical risks of global events, in order to make more robust connections about the how and why of what’s happening around the world.
