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PwC: Supply Chains Threatened by Six-Degree Global Warming

Some 85 percent of companies have more complex supply chains as a result of globalization, and adjusted climate forecasts mean businesses should expect climate change to have an even more destructive effect than previously assumed on supply chains, assets and infrastructure, according to two reports from PricewaterhouseCoopers.

The first PwC report, 10 Minutes – Risk ready: New approaches to environmental and social change, says many companies now view preparation for climate change as not only an indicator of resilience, but also as a competitive advantage.

The report, published as the northeast begins recovering from Hurricane Sandy, says the ability to anticipate — and plan for — potential weather disasters is vital. Companies should embed sustainability practices into their business models to mitigate the risks associated with these major weather events.

One way to build resilience is to increase buffers — the margins that provide short-term space needed to absorb shock after a disaster. PwC uses PG&E as an example of how to put these buffers in place.

Because California’s temperatures rise between May and October, which means higher electricity demand, the utility implemented a voluntary program for small commercial and residential customers who agree to shift their power use in exchange for discounts. PwC reports there are 25,000 PG&E customers participating, resulting in a 16 percent reduction on high-load days.

Natural disasters are costly, PwC says, and only 33 percent of $380 billion lost in 2011 to natural disasters was covered by insurance. Natural resources like water and energy continue to be strained, and working closely with suppliers can help pinpoint issues.

PwC’s warnings are playing out in real time, with companies from Amazon to railroad firm CSX telling customers to expect delays on shipments as Hurricane Sandy continues to back up supply chains and slow deliveries leading into the holiday season. Some economists say Sandy’s total impact on the US economy could total up to $45 billion in damage and lost production, with the losses from closed businesses and drops in consumption possibly outweighing the cost of physical damage.

Looking ahead, companies need to address the early environmental warning signs and identify areas of risk, the report says.

Meanwhile, a separate PwC report says the world is heading for a six-degree rise in temperature by the end of the century. The PwC’s Low Carbon Economy Index 2012 says that governments’ ambitions to limit warming to 2 degrees Celsius appear highly unrealistic. Companies can no longer assume the 2 degree increase as a default scenario, and investments in long-term assets and infrastructure, particularly in coastal and low-lying areas, need to address a more pessimistic outlook.

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5 thoughts on “PwC: Supply Chains Threatened by Six-Degree Global Warming

  1. Thought “Global Warming” was debunked, what, 10 years ago?
    Thought it then became “Climate Change?”
    Was this story written that long ago?

  2. Change is hard for everyone to accept…it takes time. Look into the past…horse & buggy, typewriter, secretaries…endless list of change that was fought. Science be damned as well, look around. Everyone has PDAs. Look around, the weather is out of control and never been like this before…DUH!!! debunked… what we live now is due to the political debunking 10 years ago.

  3. Six degrees of warming and you are concerned about supply chains? Wake up! The Earth changes at 6-degrees will make Sandy look like a tempest in a teapot.

  4. Oh, you want to know about weather manipulation?
    Read this: http://www.haarp.alaska.edu/
    Now, if you want the truth: http://www.bariumblues.com/haarp1.htm
    So, you see, taxing carbon in the U.S. has less than nothing to do with manipulated weather. Sandy was intensified and directed into U.S. cities. Say thank you to your fearless leaders.
    Oh, read U.S. Constitution Article II, Section 1, Clause 3 to learn that there should be no “Party Ticket” and no “primary” process. No one should pick your VP.
    Read the truth. You might enjoy it, for a change.

  5. A six degree (C is assumed) rise in global mean temperature will do a lot more than strain multi-national firms’ supply lines. Try a mass-level extinction of ocean and terrestrial species, and in all likelihood the deaths of billions of humans.

    Business as usual in a catastrophe?

    Other firms are looking to profit from AGW-caused climate disasters. And of course, oil companies are hell bent on drilling for more greenhouse gas-emitting energy in the Arctic.

    Like the doctor said in “Bridge Over the River Kwai”: madness.

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