- Published: Fri 15 Jul 2022 09:31
A Gartner, Inc. study found that only 27% of supply chain leaders have conducted a climate change risk assessment to identify the most important supply chain risks. of respondents perform both risk assessment and scenario planning.
“It is difficult to predict the impact of climate change, but it is possible to model the risks and opportunities that may arise. must also be done.”
The survey found that 44% of respondents have a general sense of potential climate change risks based on past events. This means that while we understand that climate change risks are emerging, they are not systematically identified or quantified. However, the past is not a good predictor of future climate change events, as the severity and impact of events escalate.
“Scenario planning is an important part of the process because it highlights key elements of future possibilities and helps direct attention to key factors driving future development. In an uncertain future, organizations that rely on more resilient inputs, such as drought-tolerant crops, can gain a competitive advantage.
Lack of foresight and long-term decision-making are the biggest challenges of climate adaptation
Gartner says adaptation to climate change should be included in investment decisions. For example, when building a new manufacturing plant, the design must consider future climate change threats such as heat waves and water shortages. But the need for financial investment can deter action. The biggest barriers to planning for climate change in supply chains include a focus on short-term decision-making (57%) and an inability to link causes and investments to benefits (57%).
Using technology to assess climate change risk, which is still in its infancy
Only 19% of companies surveyed are using digital technology to understand their climate change risks. 85% of organizations using technology use predictive analytics. Examples of tools that can be used include artificial intelligence (AI) capabilities such as geospatial analysis, drones, and ecological simulations. Many organizations also partner with outside consultants to help model their scenarios.
Gartner clients can read more in the Supply Chain Executive Report: Adapting Supply Chains to a Changing Climate.
Learn more about non-Gartner clients in How Supply Chains Are Adapting to a Changing Climate.