Report: U.S. supply chain lags others in climate-change risk readiness

The United States’ supply chain network is trailing other countries in tracking its environmental impact and readying for the risks posed by climate change, according to a new report.

cdpLondon, England-based nonprofit CDP this week released its annual supply chain sustainability report, which surveyed more than 3,000 suppliers around the globe on a number of measures, including whether they track carbon emissions and set targets and whether they have a formal climate change-focused risk management program in place. It’s billed as the most comprehensive look at climate risks and opportunities for the global supply chain.

Viewed broadly, CDP found supply chains in the 11 countries examined made little to no aggregate improvement in developing sustainable supply chains – but results from country to country varied widely. Japan – site of the cataclysmic 2011 earthquake and tsunami that pummeled supply chains around the globe – was found most ready to respond to the attendant risks of climate change. Supply chains in the U.S., China and Italy, by comparison were considered vulnerable.

In its look at the U.S. supply chain network, CDP found barely half of the suppliers surveyed have formal climate management processes in place, compared with nearly two-thirds globally. On the upside, CDP found more U.S. suppliers are setting emissions targets, but that 37 percent share still lagged the global average of 48 percent. CDP goes as far as to state climate risk is “building up” in the U.S., due in no small part to highly divergent political views on how to address the issue.

The effects of climate change remain a major factor companies will be facing in the coming years – but far from the only one. Tom Goldsby, a professor of logistics at The Ohio State Fisher College of Business, names climate change just one of a handful of “macrotrends” on the horizon in his new book, Global Macrotrends and Their Impact on Supply Chain Management. Others include explosive population growth in as-yet underdeveloped countries, a rising global middle class and the scarcity of natural resources.

Both Goldsby, a Center for Operational Excellence associate director, and CDP also see the same benefit for companies that take a proactive role in tackling this and other challenges: Competitive advantage.

“A greater awareness of sustainability and its implications for managing supply chains is not only prudent from a risk standpoint, but wise from a growth perspective.,” Goldsby said. “Companies that innovate through supply chain sustainability are not only admirable, but prove more productive and agile.  Their inspiration also helps to attract and retain talent while garnering interest from progressive customers and suppliers.”