Climate change

Definition

Climate change refers to significant and lasting changes in global temperatures and weather patterns over time, primarily driven by human activities such as burning fossil fuels, deforestation, and industrial processes. This phenomenon poses a wide range of risks to supply chains, including disruptions caused by extreme weather events, shifting resource availability, and changes in regulatory environments that affect production and logistics.

5 Must Know Facts For Your Next Test

1. Climate change is expected to increase the frequency and severity of extreme weather events, such as hurricanes, floods, and droughts, which can disrupt supply chain operations.
2. Changes in temperature and precipitation patterns can impact agricultural production, leading to food shortages or increased prices that affect supply chains dependent on raw materials.
3. Regulatory changes aimed at addressing climate change can impose new compliance requirements on companies, affecting their production processes and cost structures.
4. Supply chains are increasingly being evaluated based on their carbon footprints, with companies needing to adopt more sustainable practices to remain competitive.
5. Investments in infrastructure resilience are becoming essential as organizations prepare for the impacts of climate change on their supply chain networks.

Review Questions

• How does climate change contribute to supply chain risks associated with extreme weather events?
  • Climate change leads to more frequent and severe extreme weather events like hurricanes, floods, and droughts. These events can disrupt transportation routes, damage facilities, and create delays in product delivery. As a result, companies must develop contingency plans and adapt their supply chain strategies to mitigate these risks and ensure continuity of operations.
• Discuss the implications of regulatory changes related to climate change for supply chain management.
  • Regulatory changes aimed at combating climate change often require companies to implement new compliance measures concerning emissions reductions and sustainable practices. This can impact supply chain management by increasing operational costs or necessitating changes in sourcing materials. Companies need to stay ahead of these regulations by integrating sustainability into their supply chain strategies to avoid penalties and enhance their market position.
• Evaluate how businesses can enhance their resilience in supply chains facing the challenges posed by climate change.
  • Businesses can enhance resilience by investing in flexible logistics solutions, diversifying their supplier base, and implementing risk management practices specifically tailored to climate-related disruptions. This may include adopting technologies that improve real-time monitoring of supply chains or establishing partnerships with local suppliers who are less affected by extreme weather. Additionally, promoting sustainability initiatives not only reduces environmental impact but also strengthens a company's reputation and long-term viability amid changing market conditions.

Related terms

greenhouse gases: Gases such as carbon dioxide, methane, and nitrous oxide that trap heat in the atmosphere, contributing to the greenhouse effect and global warming.

sustainability: Practices and strategies aimed at meeting current needs without compromising the ability of future generations to meet their own needs, often involving the reduction of environmental impact.

resilience: The ability of a supply chain to prepare for, respond to, and recover from disruptions, including those caused by climate change impacts.