Value Chain Risk to Resilience Overview
Climate change poses severe risks to businesses and their suppliers, employees, customers, and communities along the value chain. Examples are increasingly frequent and severe: floods in Thailand disrupting electronic supply chains in 2011; drought in the U.S. forcing a global spike in food prices in 2012; and category 4 hurricanes Harvey, Irma and Maria destroying and disrupting major regions in the US and Caribbean in 2017. Businesses must take direct action and partner with government in new and different ways to make themselves more climate resilient.
Although climate change poses risks to company value chains, scientific information on physical climate impacts is largely unavailable in formats that companies can use in their business processes. The few companies that have conducted climate risk assessments have found it difficult or costly to act alone. In addition, there is no standard methodology or approach for climate risk assessment, for selecting metrics for programs to build climate resilience, or for integrating climate risks into corporate governance and enterprise risk management processes.
Value Chain Risk to Resilience aims to radically increase the ability to diagnose physical climate risks and the understanding, adoption, and implementation of climate resilience measures throughout corporate value chains to deliver both societal and business value. We aim to see more companies carrying out climate risk assessments across their value chains using a science-based approach. This will enable them to undertake interventions to build resilience to those risks, and to design metrics to measure the success of those interventions.
To build climate resilience for communities, farmers and workers along value chains by:
- Assessing climate risks and integrating them into business processes
- Developing standard approaches, methodologies and metrics for business action on resilience
- Taking action and promoting collaboration among businesses
- Risk Assessment: Scalable best practice methodology for climate risk assessment
- Resilience Metrics: Shared metrics to measure impact of climate resilience-related interventions; improved tools and collateral for communicating impact of resilience-building efforts
- Business Integration: Consolidated framework for assessing governance of climate risks; identification of existing and/or recommended tools for integrating climate into risk registers and ERM processes
- Programmatic Work: Scale up of an innovative pilot intervention via shared resources of the group; at least one designed collaborative on-the-ground effort that uses the shared metrics of this platform to build resilience for a particular community or commodity
Participating companies will be able to:
- Assess climate risks along their value chains
- Use output, outcome, and impact metrics to measure climate resilience
- Implement the TCFD recommendations on governance and enterprise risk management
- Develop programmatic work to address climate risks with other companies