Can businesses afford to leave climate out of their risk management process? Kevin Vranes, Chief Product Officer of Worldly, is a specialist in climate science data and discusses here the growing risks to supply chains and how businesses are using supply chain data to strengthen risk management, avoid financial losses, and uncover growth opportunities.
While the SEC’s recent decision and EU Omnibus CSRD updates to ease disclosure requirements may have companies rethinking their next steps in measuring their supply chains emissions, it’s critical we remember that a company’s supply chain footprint has always been about more than just compliance. Companies that don’t capture supply chain impact data expose themselves to a much bigger risk: disruption.
Extreme weather, resource scarcity, and geopolitical instability are hammering global supply chains, and the companies failing to integrate climate-related risks into their logistics strategies are the ones facing the most serious financial threats. Adding to that, the latest McKinsey Global Supply Chain Leader Survey suggests companies are easing their focus on supply chain resilience — just as they should be doubling down.
The World Economic Forum’s Global Risks Report ranks extreme weather as the second-most severe risk for 2024-2025, with nearly all environmental threats appearing among the top 10 long-term risks. The truth is in the numbers. Only 28% of companies reported diversifying supplier base to diminish critical exposure to climate risks in their supply chains. Even more problematic? The economic risks of climate change to global trade are projected to reach approximately US$81bn in 2024 alone. To add to that, the sheer scale of potential impacts and the vast infrastructure investments required to mitigate them could overwhelm societies’ ability to adapt, leaving some communities and nations unable to withstand both the immediate and lasting effects of a rapidly changing climate.
Leveraging data to mitigate risk
Traditional risk management approaches often fall short when it comes to logistics. Companies relying on historical trends and broad-stroke contingency plans are being blindsided by increasingly volatile disruptions. The missing piece? Real-time, primary data that provides full visibility across supply chains. Companies have the data they need to understand the impact natural disasters could have on their supply chains – but how can they act on it?
Understanding the potential regional risks to supply chains enables companies to predict the hotspots that could cause issues down the line before they become critical disruptions.
The secret weapon in a corporate toolkit
For businesses operating in an increasingly volatile global landscape, integrating climate-related risk into logistics and supply chain operations isn’t just about avoiding losses — it’s a strategic advantage. Companies that fail to account for these risks face growing threats to profitability, from supply shortages to increased costs and reputational damage. On the other hand, businesses that proactively adapt — by leveraging climate risk data, diversifying supplier networks, and integrating sustainability into their operations — can turn these challenges into competitive strengths.
Beyond risk mitigation, companies that prioritize supply chain visibility can gain a serious competitive advantage. Supply chain disruptions aren’t just a cost center; they’re a direct threat to market position. Companies that treat supply chain data as a strategic asset — not just a compliance requirement — will be the ones that succeed in an increasingly unstable landscape. Climate-related disruptions aren’t a hypothetical future risk. They’re here. And businesses that aren’t using data to build resilience into their logistics operations are already losing ground to those that are.
If the last few years have proven anything, it’s that global supply chains are operating in an era of compounding crises. Compliance deadlines may be shifting, but the financial stakes aren’t. The choice is clear: use data to future-proof logistics — or pay the price for flying blind.
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