Climate change presents a 'material risk' to the supply chain

27 January, 2012

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27 January 2012 | Adam Leach

The majority of UK businesses fail to see climate change as a “material risk” to their supply chain and operations, according to a report.

A report Climate Change Risk Assessment, published yesterday by the Department for Food and Rural Affairs (Defra), The Environment Agency and both the Welsh and Scottish Governments, cited factors such as flooding, fluctuating water availability and a greater frequency of supply chain disruptions as potential risks to businesses as a result of climate change.

It explained that while a number of businesses, predominantly national and multi-national corporations, are taking climate change seriously, they are in the minority.

“The vast majority of organisations have yet to recognise climate change as a material risk, and if they have recognised it may only be considered as a long-term, future risk with little relevance to today’s challenges.”

The report outlined a number of challenges that businesses would need to overcome. These included embedding climate change considerations into standard business practices, increasing the expectation to disclose material climate change risks in corporate reports and greater sharing of information across sectors.

Commenting on the report, Caroline Spelman, environment secretary, said: “Rising temperatures, rising sea levels, and increasing frequency of extreme events have direct effects on people’s lives as well as disrupting commodity prices, supply chains, markets and economies.”

Matthew Brown, CBI head of energy and climate change policy, said: “The CBI has suggested that companies include climate change as part of their on-going risk management, including looking at risks to their supply chain, assets, operations, markets, regulatory compliance and business reputation. We also say that climate exposure should be included in corporate reports.”

The report proposed a number of significant future risks that could occur if no further action was taken to deal with climate change. It proposed that if no further plans to adapt to changing flood risks were made, annual flood damage to property could reach £2.1 billion. It also proposed a significant health risk associated with temperature rises, and increased pressures on water resources.






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