Climate change risks may force more investor attention on a company’s supply chain related to greenhouse gas emissions

Climate change risks may force more investor attention on a company’s supply chain related to greenhouse gas emissions

The Sustainability Consortium (TSC) has partnered with HSBC to urge companies to prepare supply chains for the risk of climate change disruptions that threaten to raise costs and jeopardise their ability to meet customer needs.

The NGO and the financial institution have made the call in a new whitepaper 'Improving Supply Chain Resilience to Manage Climate Change Risks', which warns that climate change will result in more extreme weather events and continued sea-level rise, which will continue to disrupt supply chain configurations with more frequency.

Supply chain disruptions from climate change can increase the cost or lower the quality or quantity of supplies provided to a manufacturing by its suppliers, they say.

"We're helping our customers think holistically about supply chain risks, and this report provides valuable insight into planning for, and mitigating disruptions caused by, climate change," says co-author Dr Kevin Dooley, TSC chief scientist and faculty at Arizona State University (ASU).

"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."

The whitepaper also found that climate change risks may force more investor attention on a company's supply chain related to greenhouse gas (GHG) emissions. To better plan for the future, the report suggests companies incorporate climate change into a broader supply chain risk management strategy.

The co-authors say companies that address resiliency can be more attractive to employees, customers, and investors.

"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). "We're helping our customers think holistically about supply chain risks, and this report provides valuable insight into planning for, and mitigating disruptions caused by, climate change."