The minute
- The World Meteorological Organization (WMO) projects the current El Niño will peak in December 2026 and persist through February 2027, making it the strongest event in the last 75 years.
- The phenomenon is expected to raise temperatures across most of the planet during the coming months.
- The previous major El Niño episode already accelerated heat and drought patterns that scientists described as a “new normal” for tropical forests.
Why it matters: El Niño events of this magnitude reshape commodity markets, stress power grids and multiply the frequency of climate disasters. The 2015-2016 Super El Niño, the last comparable episode, caused global crop losses estimated by the FAO in the tens of billions of dollars and triggered droughts in Southeast Asia, southern Africa and parts of South America. A stronger repeat raises the stakes for governments and companies that have not stress-tested their operations against extreme climate variability.
What a Super El Niño changes for Brazilian companies
Brazil sits at the crossroads of El Niño impacts. In the South (Rio Grande do Sul, Santa Catarina, Paraná), El Niño historically brings excessive rainfall, flooding and logistical disruptions. In the North and Northeast, it tends to suppress precipitation, deepening drought in the Amazon basin and the semi-arid Sertão. For agribusiness, the country’s largest export sector, this split pattern forces simultaneous management of flood risk in soybean and rice fields in the South and water scarcity for cocoa, cattle and hydroelectric generation in the North.
Energy companies face a dual problem. Reduced rainfall in the Amazon basin lowers reservoir levels at major hydroelectric plants (Belo Monte, Tucuruí, Santo Antônio), which still account for roughly 60% of Brazil’s electricity matrix. The 2023-2024 El Niño already pushed spot electricity prices upward and forced greater reliance on thermal plants, raising both costs and emissions. A stronger episode in 2026-2027 could repeat or exceed that pattern, with direct implications for Scope 2 emissions reporting under frameworks like GRI and the forthcoming ISSB-aligned disclosures that CVM (Brazil’s securities regulator) is implementing.
Disaster preparedness: what is still undecided
Brazil’s national civil defense system (Defesa Civil) and the Center for Monitoring and Early Warning of Natural Disasters (CEMADEN) have improved forecasting capacity since the catastrophic floods in Rio Grande do Sul in 2024, but key gaps remain. Municipal-level contingency plans are not standardized, and funding for climate adaptation infrastructure (drainage, slope stabilization, emergency housing) depends on federal budget allocations that have not yet been confirmed for the 2027 fiscal year. The question is whether early warnings will translate into preemptive action or, as has happened before, remain informational while vulnerable communities bear the consequences.
For companies with ESG reporting obligations, the approaching Super El Niño is a concrete test of climate risk governance. Physical risk disclosures under TCFD and its successor IFRS S2 require scenario analysis. An event forecast months in advance, by the WMO itself, leaves little room for claiming the impact was unforeseeable. Insurers, investors and regulators will look at whether boards acted on the warning or treated it as background noise.
Winners and losers
The sectors most exposed on the downside include rain-fed agriculture in the North and Northeast, hydroelectric generators dependent on Amazon basin flows, and municipal governments in flood-prone areas of the South that lack resilient infrastructure. On the other side, thermal power generators (gas and biomass) stand to benefit from higher dispatch volumes, as do agricultural producers in irrigated regions who can maintain output while competitors face losses. The reinsurance sector will likely reprice catastrophe risk for Brazil, raising costs for agribusiness and property insurers across the country.
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