Climate change is increasingly disrupting the global economy, challenging businesses across all industries. In 2021, severe drought in Brazil reduced coffee production by 25%, increasing world prices by 80%. In recent years in France, repeated mild winters and late frosts have led to significant production losses. Beyond production, major floods have slowed down or prevented maritime and road transport. From shifting weather patterns to more frequent natural disasters, there are countless examples like these, demonstrating how operations and supply chains are affected by climate change.
Despite these growing threats, businesses have been slow to adapt to the direct consequences of climate change. They focus on reducing their greenhouse gas emissions while overlooking how the changing climate affects their own operations. Yet, as the World Economic Forum highlighted in 2023, failure to adapt to climate change is one of the top risks businesses will face over the next decade.
Mitigation or adaptation
There are two major strategies to cope with climate change: mitigation and adaptation. Picture a sinking boat. Water is pouring from a leak; the first move is to seal the breach. That is what companies focus on: mitigation strategies. Mitigation strategies address the root of the problem, meaning lowering the impact of activities on the environment. However, the water that has already leaked into the boat still poses a risk of sinking it, even if the leak is plugged.
In this case, a bucket might be a solution to stay afloat. How we address the effect of the problem refers to adaptation. These strategies aim to reduce the impact of the environment on business operations. Both adaptation and mitigation are necessary, but neither is enough on its own to address the full scope of the crisis.
The fragility of supply chains makes one thing clear: adaptation can no longer be absent from companies’ environmental strategies. It is essential to develop strategies to manage both the present and future impacts of climate change, for maintaining resilience and ensuring long-term sustainability. This is especially urgent given that delaying adaptation will only make it more costly and complex.
Vulnerability of food supply chains and businesses
Nowhere is the need for adaptation more urgent than in the food sector, which is highly vulnerable to weather variations. The IPCC’s 2022 report warns that rising climate pressures are already threatening food supplies. Since 1961, global agricultural productivity has dropped by approximately 21% due to climate change. Soil fertility has declined and droughts, heatwaves, heavy rainfall, and water scarcity are all affecting agricultural yields. But disruptions don’t stop at primary production. These changes, whether in production, logistics, or distribution, can cascade into widespread crises, endangering food security at both regional and global levels.
Climate change threatens every facet of food security: availability, accessibility, quality, and stability. From farm to table, every link in the supply chain is exposed. Adaptation is a critical and strategic step for companies to safeguard not only business operations but global food security. As extreme weather events become more frequent, businesses that don’t strengthen their resilience could face rising production costs, price volatility, overwhelmed logistics networks and severe supply chain instability. In France alone, climate disasters are projected to increase direct costs by over 90% by 2040, leading to sharp spikes in food prices.
Where are we today?
The reality is that adaptation is still largely misunderstood and under-prioritised. Many companies often confuse mitigation and adaptation. The implementation of adaptation strategies remains in its early stages, and their complexity and multiple implications, including aspects of mitigation, finance and responding to consumer demand, make them difficult to understand. Implementing them is made all the more complex by the lack of tools available to organisations, both to understand the risks posed by climate change and to monitor the strategies once they are in place.
Therefore, most efforts in adaptation are partial and fragmented, limiting their overall impact. The supply chain is not considered as a whole. Resources are focused on purchasing and agricultural production. Some adaptation strategies are already being implemented: diversification – in terms of both varieties and suppliers, reduced water consumption and the introduction of alternative transport routes. However, most companies are still waiting to be directly confronted with the consequences of climate change before adopting more significant adaptation measures.
In the context of climate change, true resilience is inseparable from the concept of adaptation: it’s the ability to anticipate and be flexible. Adaptation will determine how well systems can react and adjust during periods of disruptions. While adaptation strategies are emerging, they remain incomplete. If companies continue down this path, businesses will struggle to withstand the growing pressures of climate change.
Moving from awareness to action: adaptation as a strategic imperative
The reality of adaptation extends beyond the food industry. Every sector must prepare, regardless of how distant climate risks may seem. The capacity of supply chains to adapt must be fully harnessed. To strengthen the link between climate adaptation and supply chain resilience, it’s vital to embed climate adaptation in management decisions.
There are several possible courses of action to start understanding and implementing adaptation solutions:
- Capitalise on what already exists: promote the explicit integration of adaptation through mitigation strategies that are already implemented, enabling companies to leverage the ambiguity between mitigation and adaptation. It will help address climate uncertainty and integrate adaptation into carbon neutrality programs.
- Create sustainable supply chain management: integrate ecological factors into risk management on the same level as economic factors.
- Analyse your supply chain: carry out a non-financial analysis of the entire chain to have a global understanding of the impact of the environment on the supply chain and vice versa.
To ensure resilience in the food system, and beyond, adaptation must be pursued with the same urgency as mitigation efforts. Climate adaptation is not just about defence, it’s a strategic imperative. The question is no longer if companies will adapt, but how fast they can implement these necessary changes.