Earth Day should be an important occasion for businesses and their supply chains. The staff at IndustryWeek explains, “Since 1970, environmentalists have celebrated April 22 as Earth Day, a moment to take stock of the planet’s health and ask what we can do to protect it. While the political strength of the environmental movement has waxed and waned over the decades, the importance of sustainability has become a corporate issue in recent years, with many companies setting targets for carbon use, recycling and emissions.”[1] The staff at John Galt adds, “Each year, the 22nd of April brings everyone together to commemorate Earth Day, the world’s largest environmental movement designed to drive positive action for our planet. Supply chains are a critical area where businesses can make a significant impact, as they are responsible for a considerable portion of greenhouse gas emissions. In fact, according to the World Economic Forum, 80% of global carbon emissions derive from supply chains. With the world needing transformational change, Earth Day serves as an important reminder of the urgency to introduce and accelerate sustainability efforts across industries and supply chain processes; to reflect on the impact that we have on our planet and to take the necessary steps to minimize it.”[2] Although there remain a number of climate change deniers and skeptics, business leaders can’t afford to ignore how climate change could affect their operations — both now and in the future.
Negative Impacts of Climate Change on Business
Brian Kateman, Co-founder and Executive Director of the Reducetarian Foundation, writes, “Climate activists tend to use apocalyptic language when describing the future. But they’re getting the framing all wrong.”[3] He’s correct. If given the chance, the planet has demonstrated a remarkable ability to recover over time. So, it isn’t a “dead planet” that concerns Kateman, but a planet that isn’t given time to recover. He explains, “A mass extinction probably isn’t exactly what’s going to happen, at least, not in our lifetimes. The more likely reality is a planet that’s very much alive, and full of suffering. … In all likelihood, there will be life on Earth for a very long time — and we should be very, very concerned about the quality of those lives.” Business leaders should also be very, very concerned about the future of their companies. I say business leaders “should” be very, very concerned, because they don’t appear to be. Journalist Kara Baskin reports that a study sponsored last year by the MIT Center for Transportation & Logistics and the Council of Supply Chain Management Professionals found an appalling lack of action. She writes, “The numbers tell a worrisome story: Of 2,300-plus global respondents to the ‘State of Supply Chain Sustainability 2023‘ report, some 65% of respondents said their firms do not currently have a net-zero carbon emissions goal, and just 6% reported a year-over-year increase in organizational commitment to climate change mitigation.”[4] The report’s sponsors define supply chain sustainability as “the management of environmental and social impacts within and across networks consisting of suppliers, manufacturers, distributors, and customers.”
Those results might be surprising considering the fact that another 2023 study, this one by Axa entitled “Future Risks Report,” found, “Climate change has again topped the risk rankings of both experts and the general public, … with respondents recognizing the increasing interconnectedness of risks and advocating for a global response to the current risk landscape.”[5] The only way to reconcile the two studies is recognizing that money talks. Supply chain journalist Robert J. Bowman explains, “There’s no lack of awareness within industries of the importance of addressing ESG [environmental, social and governance] issues. Seventy-eight percent of respondents to a survey by Vizbl on decarbonization readiness said it’s important to reduce Scope 3 emissions — those generated by supply chain partners over whom the original equipment manufacturer or ultimate buyer has no direct control.”[6] He notes, however, “For many businesses today, the desire to comply with environmental, social and governance requirements doesn’t line up with the resources they’re devoting to that effort.” For most companies, the money just isn’t there — and that’s a big problem. One way or another, they will end up paying a price for climate change impacts.
Chris Cunnane, Research Director for Supply Chain Management at ARC Advisory Group, explains, “There are a variety of ways in which climate change is affecting supply chains. Perhaps the biggest threat is rising sea levels. This can cause massive flooding for coastal cities, impacting manufacturing and shipping times. This can also damage coastal infrastructure, from roads and rails to bridges and ports. All of these can have disastrous effects on the supply chain. But coastal sea levels are not the only issue. The instances of extreme weather events continue to grow on a yearly basis. This includes deep freezes in southern parts of the US, more named storms during hurricane season, and extreme heat around the world. All of these events can also lead to massive supply chain disruptions, and often times there is little to no warning before an event happens.”[7] You also have to look beyond weather events. Some companies will have access to water denied or limited. And electrical power could be intermittent as grids try to keep up with hotter and colder weather patterns. It might not be the end of the world, but adapting to climate change will be essential.
Concluding Thoughts
The John Galt staff notes, “Making our supply chains more sustainable is not only good for the environment, but it is also good for business. More and more companies are recognizing the benefits of sustainability strategies that drive value for the organization, reducing costs and driving productivity. Research from Gartner indicates that 86% of business leaders see sustainability as an investment that protects their organization from disruption.” Cunnane worries that there will more talk than action. He concludes, “New legislation and policies geared towards reducing carbon emissions and greenhouse gases are steps in the right direction. However, beyond policies and lip service, people need to step up and take a stand against climate change. Without improvements, supply chains, and the world as we know it, are in serious trouble.” Earth Day reminds us that we have only one planet. Making sure we take care of it is in everyone’s best interests.
Footnotes
[1] Staff, “Earth Day 2022: A Look at the Year in Sustainability,” IndustryWeek, 22 April 2022.
[2] Staff, “Earth Day: Working Towards Supply Chain Sustainability,” John Galt Blog, 17 April 2023.
[3] Brian Kateman, “Stop saying climate change will destroy the world. The truth is far scarier.” Fast Company, 1 April 2024.
[4] Kara Baskin, “The state of supply chain sustainability,” MIT Management Sloan School, 14 December 2023.
[5] Staff, “Climate change tops risks globally as AI and big data climbs the 2023 ranking: Axa,” The Insurer, 30 October 2023.
[6] Robert J. Bowman, “Supply Chains Want to Cut Carbon Emissions. Where’s the Money to Do It?” SupplyChainBrain, 23 October 2023.
[7] Chris Cunnane, “Climate Change and the Supply Chain,” Logistics Viewpoints, 16 August 2023.
