Companies Urged to Fortify Supply Chains from Climate Change Disruption

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The Sustainability Consortium (TSC) and HSBC released a new report today urging companies to prepare supply chains for the risk of climate change disruptions that threaten to raise costs and jeopardize their ability to meet customer needs.

Co-authored by Dr. Christy Slay, TSC Director of Technical Alignment and Dr. Kevin Dooley, TSC Chief Scientist and faculty at Arizona State University (ASU), with funding and support from the HSBC Centre of Sustainable Finance, "Improving Supply Chain Resilience to Manage Climate Change Risks" 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 a 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,” said 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.

Covid-19 has put the fight against climate change and company investments into ESG on the back burner for many companies. In fact, the head of sustainable finance at Goldman Sachs called covid-19 a “stress test” for the corporate social responsibility field that will separate the wheat from the chaff, Bloomberg reported.

John Goldstein leads the firm’s Sustainable Finance Group and also serves as chair of their Sustainable Finance Group Steering Group.