Companies Urged to Fortify Supply Chains from Climate Change Disruption

As climate change can jeopardize a company’s ability to meet customer service needs, a report issued by the Sustainability Consortium (TSC) and HSBC is urging companies to start preparing for this disruption.

The report, “Improving Supply Chain Resilience to Manage Climate Change Risk,” co-authored by Christy Slay, TSC director of technical alignment, and Kevin Dooley, TSCc hief scientist and faculty at Arizona State University, with funding and support from the HSBC Centre of Sustainable Finance, warns that climate change will result in more extreme weather events and continued sea-level rise continue to disrupt supply chains configurations with increasing more frequency. Supply chain disruptions from climate change can increase the cost or lower the quality or quantity of supplies provided to manufacturing by its suppliers.

Dooley states, “We all see the myriad of supply chain disruptions occurring during the current Coronavirus pandemic. Unfortunately, this prefaces the types of challenges that supply chains will face in the future from increasing climate change. Now is the time to create more supply chain resilience.”

“As companies worldwide are in the midst of dealing with COVID-19’s impact on their business operations and their supply chains, current events put in sharp relief the impact of supply chain disruptions on a global scale,” says Patricia Gomes, regional head of Global Trade and Receivable Finance (GTRF). 

The whitepaper also found that:

• Climate change risks may also force more investor attention on a company’s supply chain related to greenhouse gas (GHG) emissions. To better plan for the future, companies need to incorporate climate change into a broader supply chain risk management strategy.

• Bridging and buffering are strategies to enhance a company’s ability to withstand risk events and protect against inevitable failures and supply disruptions. Risk events include increased cost, lower quality supply, and delayed supply, where a disruption can delay delivering goods or services to a company’s own customers.

• Companies that address resiliency can be more attractive to employees, customers, and investors.

The authors include a supply chain climate resiliency questionnaire for those wanting to do a quick assessment of a company’s supply chain resiliency or discuss with managers.