Small firms ignoring climate change supply chain threat - report

Paul Snell is managing editor at Supply Management
10 July 2014

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10 July 2014 | Paul Snell

Smaller companies are not taking sufficient action to mitigate the threat climate change poses to their supply chain, according to the Committee on Climate Change.

The advisory body's report highlighted the need to increase the resilience of UK infrastructure and water supplies which are at risk of frequent and severe flooding and heatwaves in the future.

The committee said while some large businesses were considering the threat to suppliers posed by climate change, there is little evidence of action among smaller firms.

The study, drawn up by the Adaptation Sub-Committee which provides independent advice to the government on preparing for climate change, said climate change poses the greatest risk to supply chains in the earlier stages of the manufacturing process, partly because these suppliers are often the least understood by companies. The analysis found food, clothing and electronic equipment supply chains were the most vulnerable to climate change disruption.

It cited figures from CIPS illustrating that there is a skills gap as many companies lack the professionals able to understand the complexity of the supply chain.

“It is clear that some supply chains will be at a greater degree of risk from climate change than others,” the report said. “The additional cost of considering climate risk is likely to be small when assessing supply chains. Doing so may complement other actions which improve supply chain resilience and ultimately the financial performance of a company.”

The report added the UK government should provide greater incentives for businesses to boost their resilience, and firms should improve their understanding and flexibility of their supply chains.

But the study also said there were opportunities for UK business to develop goods and services that will help businesses adapt to volatile weather, as demand for these will increase.

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