Climate change will continue to cause more extreme and unpredictable weather conditions, dramatically increasing the frequency and risk for environmental disasters such as landslides, droughts and floods—all of which can have devastating business impacts.
As a result, agricultural, food and beverage companies tasked with nourishing the world, as well as sustaining and growing their business, face mounting pressure to protect their supply chain and mitigate the economic impacts of these climate change-charged events, as well as provide their customers with quality, affordable products.
While food and beverage companies can’t turn back time on climate change, they can take steps to prepare and adapt. Below we offer six steps, as well as actionable tips, to get your efforts started.
1. Take inventory of your vulnerabilities
Your company is likely focusing on a variety of sustainability initiatives to reduce your environmental impact and add business value, but does your sustainability strategy specifically address climate-associated risks across your supply chain?
From harvesting raw materials to delivering your products to customers, every step of your supply chain can be impacted by changing weather patterns and the weather events that come with them. As a result, you need take a holistic approach to understanding where risks and opportunities lie.
Tip: Use hazard maps and engage experts to take stock of your vulnerabilities, and use that information to create an action plan. For example, when it comes to your brick and mortar facilities, outline next steps and contingencies for moving out of high-risk areas, or partner with civil engineers to design infrastructure improvements that can help protect your facilities.
2. Prepare for an uncertain commodity market
As weather patterns continue to change, crops will no longer grow in the same areas they used to, which will undoubtedly affect your long-term commodity contracts.
Tip: Take steps to renegotiate current contracts in high-risk areas. In addition, pursue alternative contracts operating in lower-risk areas to expand your network and help ensure access to raw materials into the future.
3. Invest in alternative shipping routes
Floods and landslides can cut off critical transportation routes, causing a ripple effect across your supply chain that can lead to stopped production, delayed distribution and lost revenue.
Tip: Research and invest in alternative shipping routes to climate-proof your distribution network. This will ensure you have additional ways to get ingredients to your facilities, and ship the finished product to your distributors and customers.
4. Take steps to prepare for outages
Electricity and water supply interruption is already happening in many countries—even within those that are well-run—and the increasing frequency of weather events means even more risk.
Tip: Invest in back-up supplies of water and electricity. In addition, take steps to reduce consumption as much as possible by implementing new technologies to improve processes and reduce waste.
5. Invest in innovation
As the world becomes increasingly aware of the impacts of climate change, consumer preferences and expectations are shifting. As a result, innovative companies are rising to meet consumer demands by focusing on creating new, more sustainable products.
Tip: Look for ways to diversify your business offerings to include more sustainable, comparable or innovative products to address risks and gain a competitive advantage.
6. Go beyond short-term impacts
Climate change is more than just landslides, droughts and floods; these are episodes that represent short-term, weather-related impacts. There are also long-term trends such as melting snowpack, degrading water quality and changing land aridity that food and beverage companies need to consider.
Tip: Develop long-term goals and correlating actions to include in your overall sustainability strategy. Make sure to include benchmarks to guide your efforts, as well as help you measure whether you’ve hit your objectives. If you’re unsure where to begin, or lack the internal resources, partner with an environmental consulting firm with food and beverage industry experience. A consultant brings broad-based knowledge, expertise and resources to the table to help you identify risks, uncover opportunities and build a roadmap to success.
Take Action Now
While extreme weather events present short-term risks, addressing them now is critical for preparing, adapting and bolstering your business against the long-term impacts of climate change.
Get a closer look at how short-term weather events can affect the supply chain, and get tips for adapting your business by checking out our new Business of Climate Change infographic.