Asda aims to build resilience

18th June 2014


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  • Products ,
  • Supply chain ,
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  • Corporate governance

Author

Craig Wood

An estimated 95% of all fresh produce on Asda shelves is at risk from climate change, with over a third classed as "high risk", according to a recent report from the US-owned retailer. The report highlights the company's global supply chain as particularly vulnerable.

Asda, owned by Walmart, commissioned PwC to map climate change risks across the company’s entire international supply chain and its UK operations using global warming models developed by the Intergovernmental Panel on Climate Change (IPCC).

It found that droughts, flooding and other extreme weather events are a particular concern, and, says Asda, PwC discovered that most of its supply chain risks come from global food sourcing, food processing and logistics, with an estimated business value to the company of £370 million.

Speaking at the launch of Asda’s climate resilience programme, Paul Kelly, vice president of corporate affairs at Asda, said the supermarket would be “rebalancing the relationship” with suppliers, producers and buyers to ensure continuity of supply in the face of the risk.

Over the past 10 years Asda has significantly reduced its own environmental impacts, with, for example, a 33% reduction in energy consumption. Cost savings through improved environmental performance will be passed on to customers through £800 million savings in retail prices, says the retailer.

But it is global and national supply chains that remain vulnerable. Kelly says the company intends to work with its suppliers and producers on ways to adapt to climate change risks and improve efficiency. “If they haven’t got plans, how can we help them? What do we need to look at in terms of how we work with our supply base to make them more efficient? That’s [about] sharing information, looking at how we could invest and encourage investment in those suppliers so they are able to continue to supply us,” said Kelly.

Asda will work with its suppliers through its “Sustain & Save Exchange” programme and develop a working group to strengthen resilience to a changing climate. The retailer will also undertake more detailed analysis of products that are most vulnerable and develop a climate awareness programme for category directors where the risks are high.

As part of its study, PwC also assessed the risks to 23 Asda stores and 19 distribution centres, and the retailer now plans to work with the Environment Agency to conduct full flood risk assessments to ensure all its stores and distribution centres can continue to operate effectively. The agency’s climate ready guidance will be used to assess climate change risks across Asda’s UK supply chains.


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