David Wei co-authored this story
According to the U.S. National Oceanic and Atmospheric Administration (NOAA), 2017 was the third-warmest year on record, the U.S. experienced three of the top five costliest hurricanes in its history that same year, and the 20 warmest years on record have all occurred since 1995.
Businesses already experience the negative impacts of climate change—including infrastructure damage, operational disruptions, logistics challenges and input supply interruptions, not to mention the effect on customers. Since 2011, the World Economic Forum’s annual Global Risks Report has ranked climate risks a high priority for business in terms of both likelihood and impact.
It is critical for business to understand the full spectrum of climate risk—not merely how physical impacts affect infrastructure, but also the extent to which their workers and assets are exposed and how communities experience and adapt to these impacts.
To help businesses explore the interaction between climate and these areas—and to direct companies to opportunities for synergy and interventions that will build climate resilience—BSR is launching a series of reports on the nexus between climate resilience and other key sustainability issues: supply chain, health, inclusive economy, women’s empowerment, just transition and human rights. These reports aim to provide companies with an initial understanding of the importance of these intersections and, more importantly, the business case for action to drive resilience inside their companies, across supply chains and within vulnerable communities.
The first report in this series explores the business case for integrating climate risks into supply chain management. At its core, supply chain management has four primary objectives, any of which could be negatively affected by climate impacts:
For example, during Thailand’s severe flooding in 2011, more than 14,500 companies reliant on Thai suppliers suffered business disruptions worldwide, and total insured losses were estimated between $15 billion and $20 billion. Western Digital, which commands a third of the global hard-drive market, lost 45 percent of its shipments. HP lost $2 billion, and NEC cut 10,000 jobs due to a global shortage of hard disk drives.
The recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) provide a clear categorization of climate risks, which are unifying the vocabulary to describe them. The task force uses two categories of risk, both of which companies should assess throughout their supply chains:
Previously posted on the BSR blog and 3BL Media news.
Co-author David Wei leads BSR’s climate practice to maximize the impact of their applied research, collaborative initiatives and work with individual companies to reduce greenhouse gas emissions and build climate resilience. He is also the international policy lead for the We Mean Business coalition. You can find him on Twitter @ClimateWei.
Image credits: 1) NASA's Marshall Space Flight Center via Flickr 2) Courtesy of BSR and the We Mean Business coalition
Samantha (Sam) deploys her climate change expertise through work on climate resilience and emissions reductions for BSR’s <a href="http://www.bsr.org/en/expertise/climate-change">climate change</a> practice and related work with the <a href="http://www.bsr.org/en/collaboration/groups/we-mean-business">We Mean Business</a> coalition.