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Climate Resilient Supply Chain

2 July, 2024
Climate Resilient Supply Chain

Building Supply Chain Resilience

Rio attended as sponsor the Business Reporter Supply Chain Risk and Resilience conference held in London on Thursday 27th June. Alongside procurement and supply chain professionals across a range of industries, Rio acted as a facilitator of roundtable discussions on how to adapt supply chains to the new risks posed by climate change.

This blog piece is aimed at capturing the essence of the discussion around building climate resilient supply chains and the role of climate intelligence.

 Understanding Climate Risks

The commonly agreed first step amongst the group was to understand what potential disruptions climate risks could bring to their value chain.

As a first action, mapping supply chains by identifying geographically concentrated suppliers or processes that are particularly vulnerable to physical risk (i.e. the impact of extreme weather events) and transition risk (i.e. the changes stemming from the transition to a net zero economy) was a key axis of action.

 Leveraging Climate Intelligence

The use of data and analytical tools to understand and manage climate risks was a consensus amongst panellists as they offer a valuable tool for businesses to understand their exposure to these risk factors, particularly for supply chain professionals.

By utilising climate projections and historical data, businesses can gain insights into potential disruptions that are specific to their supply chains. This insight has the benefit of empowering procurement managers and operational controllers to make informed decisions about climate mitigation strategies.

Panellists provided concrete examples of this, such as linking national meteorological office weather forecasts directly to supply chain monitoring software platforms to identify possible disruption hotspots and act pre-emptively to weather shocks.

Building a Climate Resilience Plan

Robust climate resilience plans should outline strategies to address the identified climate risks across a globally intertwined value chain. The panellists and roundtable participants echoed this point through a suit of actions:

  • Diversifying suppliers bases across different geographical regions can lessen the reliance on a single source that may be vulnerable to a specific climate risk;
  • Investing in climate-resilient infrastructure, such as flood-resistant facilities or drought-tolerant irrigation systems also play a crucial role;
  • Developing contingency plans for extreme weather events ensures minimal disruption in case of unforeseen circumstances;
  • Establishing a robust climate risk vulnerability assessment that alleviates manager judgment bias, this is a key risk to consider as operational managers tend to underestimate climate risks and in turn overestimate their abilities to adapt to climate risks.

 Competitive Advantage through Climate Resilience

By employing climate intelligence to inform robust climate resilience plans, businesses can navigate these disruptions and transform their risk mitigation strategies into a source of competitive advantage.

Businesses that proactively address climate risks demonstrate a commitment to sustainability, which resonates with conscious consumers, this also supporting uninterrupted production, delivery, minimising disruptions and financial losses.

Sustainability data platforms like Rio have the capabilities to facilitate this work, helping businesses navigate these potential climate-related disruptions and emerge stronger.

Building a future-proof supply chain leveraging climate and ESG operational data prepares entities to adapt and thrive in an ever-changing business environment.