New research published by the Carbon Disclosure Project (CDP) and Accenture indicates climate change may post a serious threat to global companies and their supply chains. The recently published data shows 70 percent of businesses believe changes in weather pattens have significant potential to impact their revenue.
Risk mitigation differs among suppliers and purchasers
According to the data, 51 percent of the risks associated with drought or torrential rain, thought to be a result of climate change, are already hindering business operations or anticipated to have an effect in the next five years. These risks have the potential to limit procurement of necessary natural resources, make it more difficult to have essential components shipped and could make it harder for a company to produce all of the merchandise it needs to remain competitive on the market and fulfill consumer needs.
Suppliers are also impacted by climate change, and the study indicates they may be less prepared to handle altering weather patterns than global corporations. Only 38 percent of suppliers have set emission reduction goals, compared to 92 percent of purchasers. This seems to show a higher level of apathy or disregard among suppliers, which could prove to have detrimental effects across the supply chain in the long run.
Unchecked emissions could lead to further erratic weather patterns, droughts and large storms, which could in be negative for both suppliers and purchasers. Suppliers may not be able to send out shipments, which could lead companies to seek new suppliers and alter their procurement strategies to work with more reliable partners in other areas.
With more companies deciding to limit emissions and implement more sustainable technology, they may do more than help prevent future climate change - they may also enjoy significant business cost reductions from using renewable technology or creating green policies throughout their supply chains.
“This research illuminates fragility in the global supply chain model," said Paul Simpson, CEO of CDP. "The marked difference in the sustainable actions of companies and their suppliers highlights a missed opportunity for suppliers to reduce energy costs and risks. The 61 percent of suppliers that failed to provide information through CDP are an even greater concern since they and their clients are unable to make a full assessment of the substantial climate risks or opportunities they face.”