Climate change threatens overseas supply chains

8th July 2013


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  • Business & Industry ,
  • Supply chain ,
  • Procurement ,
  • Management ,
  • Mitigation



The impact of climate change around the world poses a much greater threat to the UK economy than its effects nationally, says business services company PwC in a report for the environment department

The study considered the threats and opportunities under an emissions scenario consistent with a 2OC rise in global temperatures and found that threats significantly outweigh opportunities.

Short-term risks include damage to the overseas assets of UK companies and rising price volatility for food, energy and other traded resources – and these risks are likely to be amplified by protectionist reactions to extreme weather events. Longer term, a changing climate will undermine the resilience of global supply chains for many key resources, says PwC.

The report highlights the relatively large amount of UK investment abroad (£9.9 trillion in 2010), and says this exposes domestic investors and the insurance industry to damages to physical and financial assets from climate-related events. It points out the floods in Thailand in 2011 cost Lloyd’s of London £1.4 billion.

PwC’s analysis also draws attention to the UK’s reliance on food imports, which account for nearly half of its food consumption, and the risks to these supplies from climate change, reporting that the 2008 and 2011 rises in global food prices were triggered by drought overseas.

Opportunities identified by the research include the increased potential for UK companies to export its climate adaptation goods and services.

Meanwhile, the United Nations says 2013 should be a “turning point” in how governments view and respond to extreme weather, particularly floods, such as those recently in Canada and central Europe.

“Many countries have experienced huge losses over the last two months due to intense precipitation events, which have triggered extreme flooding,” said UN special representative for disaster risk reduction, Margareta Wahlström.

“When we look at the worldwide escalation in economic losses from disasters over the last five years, it is clear that our exposure to extreme events is growing and this trend needs to be addressed through better land use and more resilient infrastructure.”


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