CSCMP's Supply Chain Quarterly
October 18, 2018
Forward Thinking

Where is your supply chain most vulnerable to climate change?

A report from CDP and Accenture identifies suppliers in the United States, Italy, and China as being particularly vulnerable to disruptions from extreme weather events.

How vulnerable is your supply chain to risks related to climate change? According to a recent report, the answer may depend upon where your suppliers are located.

In Supply Chain Sustainability Revealed: A Country Comparison, Supply Chain Report 2014-15, CDP, a nonprofit organization that works with businesses to mitigate climate change and other environmental risks, and the consulting firm Accenture evaluate the current state of "corporate climate risk management" in 11 key markets: Brazil, Canada, China, France, Germany, India, Italy, Japan, Spain, the United Kingdom, and the United States. The study draws on survey responses from 3,396 companies across the globe—the world's largest data set on actions companies are taking to mitigate climate change, according to the report's authors.

The report divides the countries into four categories along a "risk/response matrix," which takes a number of factors into account, including climate-change mitigation strategies, carbon-emissions reporting, emissions-reduction initiatives, and use of low-carbon energy, among others. Suppliers in the United States, China, and Italy all fall into the "vulnerable" category, meaning that they have a high level of climate risk but have not adequately responded to that risk. Suppliers in Canada, India, and Brazil are in the "inactive" category, meaning they have a low level of risk exposure and have not made much of an effort to respond. Japanese suppliers alone are deemed "well-equipped" to respond, meaning that there is a high level of risk associated with climate change but they have taken significant steps to mitigate that risk. In the "sustainable" category are Germany, Spain, the United Kingdom, and France, where companies have also implemented significant climate change measures but do not have the same risk level as those in Japan.

The report also provides an assessment of the willingness of suppliers in the various countries to collaborate on emissions-reduction initiatives. The study found that suppliers in China and India have a high degree of willingness to collaborate with their partners on such measures. The analysis also shows that the greatest return on investment (both in terms of carbon reduction and monetary savings) will come from efforts in those countries.

On the opposite end of the spectrum, suppliers in the United States showed the least interest in cooperation. The report's authors find this lack of interest concerning given the country's vulnerability to extreme weather events such as Superstorm Sandy, which caused significant damage to the U.S. East Coast in 2012.

The complete report is available here.

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