White Paper on European Climate Risk and Trade in Europe

The European Union, home to the world’s largest single market and one of the world’s most outward- facing economies, is uniquely exposed to transboundary climate change risks due to its close connectivity with other regions and countries. Climate change is expected to increase the costs of international trade by disrupting production and supply chains, with significant social and economic spillover effects to other businesses. It will be costly and complex to adapt supply chains and strengthen trade policies in preparation for climate risks and variability.

The EU is more reliant on international supply chains than most regions, including China and the United States. The effects of climate change on international supply chains present a serious threat to the EU’s stability by compromising essential food, pharmaceuticals, and commodity imports, undermining export-driven economic growth and jobs, and affecting the health, safety, and livelihoods of workers and communities that operate supply chains. A climate adaptation-focused partnership between the EU and supply chain actors would ensure broader resilience for workers, suppliers, and their surrounding communities.

The European Climate Risk and Trade policy white paper draws on insights from a series of private sector consultations to identify some of the main barriers that are currently hindering business actions on adaptation. It explores the important role of public policies to create an enabling environment that will accelerate investments in adaptation solutions and scale up their deployment.