Climate Change

Published on October 15th, 2013 | by James Ayre


UK Companies Failing To Factor In Possible Effects Of Climate Change On International Supply Chains, Research Finds

October 15th, 2013 by  

The majority of large UK-based companies are failing to factor in the possible effects of climate change with regard to international supply lines, new research from the Carbon Disclosure Project has found. This is in spite of the fact that around 70% of them have significant overseas operations.

It’s been predicted, by a number of notable organizations and individuals, that climate change will have a significant impact on global trade, international relations, war and conflict, and supply chains. While the local effects of climate change will no doubt be considerable — especially in certain areas of the globe — perhaps the most significant effects will be felt on the global stage. Given that the current globalized system, which encompasses nearly every aspect of modern human life (for those in the “developed” world anyways), even minor disturbances to the system can have considerable effects on society. The 2010 Russian wildfires serve as an excellent example — the wildfires, which were caused by the hottest recorded summer in Russian history and record levels of drought, resulted in the destruction of 1/5 of Russia’s grain crops.

While the local effects were certainly significant — 56,000 people killed and a great number of homes/farms destroyed — the effects on our globalized system were, arguably, much greater. As the result of the fires and subsequent crop loss, Russia, one of the world’s largest wheat exporters, completely banned wheat exports. Many researchers consider this ban — the huge spike in wheat prices as well as subsequent food shortages in wheat importers that followed it — as being one of the primary factors in the development of the Arab Spring and the subsequent civilians/coups in Egypt, Syria, etc.

Image Credit: Climate Change via Flickr CC

Image Credit: Climate Change via Flickr CC

So, certainly climate change is already having an effect on international supply chains, and will no doubt continue to do so far into the future. Seems like something that you would want to take into consideration if you ran a business that relied on such supply chains, doesn’t it?

On that note… The latest FTSE350 Climate Change Report from the CDP states that about 48% of the companies that responded to its investor-backed requests for information on emissions and climate policies do not engage with their supply chain on emissions, or climate change, and report no indirect risks from climate change, “suggesting companies are not sufficiently assessing their whole value chain.”

Some key findings from the report:

  • “UK companies’ greatest risk from climate change likely to be global, not local: 69% of the FTSE 350 have international operations across 145 countries, exposing them to regulatory, physical and other climate related risks. Most report risks (86%) and opportunities (82%) but over a tenth of companies (13%) report no risks at all, indicating inadequate integration of climate change management into business strategy.”
  • “Short-term planning persists: respondents are looking primarily at direct, shorter-term risks, with only 32% of companies reporting risks and 14% opportunities with timeframes of ten years or more.”
  • “Just over a third of respondents report indirect risks, compared to nearly three quarters reporting direct risks, suggesting companies are not sufficiently assessing their whole value chain.”

Paul Simpson, chief executive at CDP, states: “Clearly a large part of the operations of UK companies are international and are insufficiently accounted for by companies when considering their environmental impact. There are advantages, such as reduced costs and increased resilience that these companies can benefit from by looking more comprehensively at their value chains and taking a longer term view.”

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About the Author

's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.

  • Ziad K Abdelnour

    Putting our money and brainpower where our mouth is, we are actually
    involved in the recapitalization of a major water bottling facility in
    Iraq as we strongly believe that the Middle East at large; as mentioned
    earlier, will need double the amount of water it used in the past. As it
    is, per capita water consumption in such comparatively Arab countries
    as Jordan is only about 80 liters and Israel is 300 liters, on a par
    with the European average. Ziad K Abdelnour

  • Steeple

    Perhaps they should figure in the cost of making people look at factories that aren’t as pleasing as say a flower. Maybe Apple should increase the cost of their products given how the productivity from them puts other people out of work.

    What a ridiculous article. They aren’t figuring in a cost because there isn’t one.

    • sambar

      You didn’t understand the article at all, did you?

      • Steeple

        No, I really didn’t. Maybe someone really bright like you could explain it to me. Remember to go slow.

        • Bob_Wallace

          Climate change is going to cost a lot of businesses a lot of money.

          Sorry, I had to use one three syllable word.

          • Steeple

            Since it really hasn’t yet, I’ll be anxious to see if it might. Still waiting on Al Gore’s “bigger and more powerful storms” that he promised in 2005. But I hear it could really get bad by 2037.

          • Bob_Wallace

            I guess information doesn’t penetrate well, down there where you’ve shoved your head….

          • Steeple

            Same bias as tornados since our ability to measure has dramatically improved since the 1930s. The monster hurricane that hit New England in the 30’s was virtually undetected until it hit.

            Name a big storm since 2005, Bob. There hasn’t been one (Sandy was a Cat 1 that was a lucky strike).

          • Bob_Wallace

            If you look at the graphs I posted you’ll see significant increase post 1980.

            As for major storms, why would you limit your count to only those cyclones that hit US soil? Wouldn’t good science include the ones that tracked off into the Atlantic before hitting the US and the ones that have formed in the Pacific? Or do you need to set boundaries so that you can create a count that fits your belief system?

          • Bob_Wallace

            Ya got me interested, Steep. I found a chart of Atlantic storms and turned it into a graph for you. The last data point is a three year average (2010 – 2012), others ten.

            I’m not sure a climatologist would say there’s enough data to say anything definite, but it does make one go Hummmmmm….

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