Guest post by: Alicia Heavisides, Head of ESG, Product Management at Dun & Bradstreet
Climate change is now a direct risk to supply chains, with consequences that extend far beyond the obvious. But the challenge goes beyond recognising the threat. Supply chains are complex, with risks often hidden deep within supplier networks. With the projected cost of environmental risks in supply chains expected to reach $120 billion by 2026[1], the question is no longer whether climate resilience should be embedded into supply chain strategy, but how fast. Today, organisations need to leverage timely, accurate data to move from reactive measures to proactive resilience.
The Immediate Threat
Environmental disruptions are no longer isolated incidents. Events such as floods, droughts, and heatwaves are increasingly frequent, causing production stoppages, material shortages, and rising insurance premiums. Agriculture and manufacturing hubs, particularly those concentrated in Asia and Latin America have faced unpredictable yields and resource constraints. A single weather-related disruption can create weeks of downstream delays, raising freight costs, straining inventories, and tightening working capital.
A prime example is the severe 2023 floods in Slovenia, a critical hub for European automotive Tier-1 suppliers like CIMOS and TPV. The disaster had a major domino effect, leading to an estimated 150,000 fewer cars being produced globally that year. This volatility quickly cascaded across the continent, forcing manufacturers like Volkswagen to cut production due to the limited delivery of essential components[2]. This confirms a dangerous reality: while the financial impact of a single environmental event is often underestimated, it also reveals deep vulnerabilities across supply chains, where many businesses struggle to adapt when disruption hits.
The Long-Term Catastrophe
While immediate shocks are already costly, the long-term implications are far more severe. Without decisive and coordinated action, climate-related disruptions could contribute to up to $25 trillion in cumulative global losses by mid-century.[3] These risks do not occur in isolation; they interact and amplify each other.
Energy systems become less predictable under climate stress, affecting everything from factory uptime to cold-chain reliability. When critical raw materials are concentrated in high-risk geographies, a single disaster can trigger sector-wide constraints. Such cascading impacts could add persistent inflationary pressure at a global scale, with significant consequences for trade, investment, and economic stability.
However, we cannot ignore the human impact of climate risk. In a single year, nearly half the world’s population endured an additional 30 days of extreme heat, underscoring the tangible human toll of climate change.[4] This situation forces a convergence of humanitarian and business risk: when worker safety, food security, and production reliability are compromised by climate stress, business continuity inevitably suffers.
From CSR to Core Strategy
For decades, climate considerations largely sat within corporate social responsibility frameworks, often treated as a box-ticking exercise. That approach is no longer enough. Climate resilience has become a strategic imperative, shaping enterprise value and risk exposure, and influencing how organisations manage risk. One of the biggest challenges is visibility: many companies focus on only Tier 1 suppliers, but this approach dangerously underestimates the systemic risk posed by Tier 2 or Tier 3 partners. If a key Tier 1 supplier relies on a vulnerable partner further down the chain, the entire operation is now exposed. Regulators, investors, and insurers now expect organisations to understand and manage these risks across their full supplier network.
Reliable, timely information allows businesses to map their supply chains in detail, spot hidden risks, and make decisions that strengthen resilience. By using data to track supplier dependencies, monitor environmental exposures, and model potential disruptions, organisations can move from reactive responses to proactive contingency planning. The ability to see beyond immediate partners and understand the broader network is what sets resilient businesses apart. Where climate events can quickly escalate, data is the link that turns awareness into action.
Actionable Pathways Forward
Building climate-resilient supply chains requires the integration of ESG risk data into procurement and supplier management decisions. Steps that business leaders can take include:
Embedding ESG risk data into procurement decisions: Prioritise climate risk indicators alongside traditional metrics such as cost, quality, and continuity.
Mapping critical suppliers and at-risk regions: Achieve visibility not only into Tier 1, 2, and 3 suppliers, but across the entire network through Tier N mapping, to understand concentration risk and vulnerability hot spots.
Strengthening supplier engagement: Collaborate with suppliers on climate adaptation measures, from water stewardship to workforce safety planning.
Scenario modelling and diversification: Use predictive analytics to stress-test supply routes, source alternatives, and assess the financial impact of disruption.
Aligning governance with climate risk: Ensure board-level oversight and incorporate climate-related risk assessment into enterprise planning and financial strategy.
The urgency for climate resilience in supply chains is already evident in operational disruptions, shifting costs, and regulatory demands. The organisations that invest in data, broaden visibility across all supplier tiers, and embed climate risk in strategic decisions will be best placed to safeguard continuity and create lasting value. Moving beyond awareness to decisive action is now essential for long-term success.
[1] CDP Transparency to Transformation: A Chain Reaction
[2] Supply chain headaches return for Volkswagen as floods in Slovenia force production to halt throughout Europe – Car Dealer Magazine
[3] Nature Study: Global supply chains amplify economic costs of future extreme heat risk
[4] Report: Climate Change and the Escalation of Global Extreme Heat (Heat Action Day 2025)
