Climate change supply chain disruptions: How to prepare

The onset of the coronavirus pandemic caused unprecedented, worldwide supply-chain disruptions, but experts say that’s a drop in the bucket compared with the disruptions that climate change will cause.

Wildfires in the American West, flooding in China and Europe and drought in South America are already disrupting supplies of everything from lumber to chocolate to sushi rice.  

“Whether you’re in the agricultural sector or the forestry sector, or in the tech sector, there is really no particular sector that is immune from climate change,” said Christy Slay, senior director of science and research applications at The Sustainability Consortium.

Take, for example, lumber. About a quarter of the lumber consumed in the U.S. comes from Canada, which is seeing severe drought and wildfire conditions.

“The wildfires burning in Western Canada are significantly impacting the supply chain and our ability to transport product to market,” Canadian lumber producer Canfor Corp. said in July. “As a result, we are implementing short-term production curtailments at our Canadian sawmills.”

The homebuilding industry is already suffering severe supply-chain issues due to Covid, and fires are only exacerbating that.

“Wildfires in the West and Canada are a challenge for lumber production. While prices have come down, the building material supply chain remains vulnerable to disruption,” said Robert Dietz, chief economist for the National Association of Home Builders.

Brazil is now suffering its worst drought in more than a century. That, in part, caused the price of coffee futures to soar in July, nearly double what they were the previous year. While the increase has not been passed on to the consumer yet, experts say it will be shortly.

Even sushi rice is getting hit. Two-thirds of America’s is grown in California, which faces water shortages due to drought and the wildfires. Rice production involves massive quantities of water.

Extreme weather events also hit supply chains when workers are unable to physically get to their jobs. Workplace disruptions caused by climate change could lead to more than $2 trillion in productivity losses by 2030, according to a recent report from the United Nations Development Program.