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On 9 May 2024, SEI Policy Fellow Mikael Allan Mikaelsson shared key findings from his work on the European Climate Risk Assessment at the Nordic Environment and Climate Ministerial spring meeting.
His presentation highlighted the urgency for business-led adaptation to safeguard Nordic countries from the increasing threat of supply chain disruptions due to climate change.
Read on to discover key strategies and insights for navigating these challenges.
Mikaelsson outlined how extreme weather events and degraded ecosystems – exacerbated by climate change – are disrupting key global supply chains. This disruption poses severe risks, including shortages of essential goods like food and medicine, halted production lines and soaring prices. Such impacts could precipitate dire consequences for food security, access to healthcare, and the overall continuity of business operations across the Nordic region.
Highlighting Europe’s particular susceptibility, Mikaelsson pointed to the continent’s heavy reliance on imports and the concentration of critical production in climate-vulnerable regions. The EU, for instance, sources a significant proportion of its agricultural products and pharmaceutical ingredients from outside its borders, placing essential sectors at high risk in the face of climate volatility.
Recent findings by UCL researchers reveal that global GDP loss from climate change could drastically increase when considering the cascading impacts on global supply chains. The study, which for the first time charts “indirect economic losses” from climate change, projects a potential net economic loss of between USD 3.75 trillion and 24.7 trillion in adjusted 2020 dollars by 2060.
Mikaelsson’s presentation highlighted three specific areas of vulnerability:
Existing data suggests a glaring lack of preparedness among businesses for handling these emerging risks. Only a minority of companies have implemented robust plans to manage climate impacts, indicating a crucial gap in corporate risk management strategies. Mikaelsson emphasized the necessity for public policies that motivate the private sector to adopt proactive adaptation measures. He suggested that mechanisms such as mandatory due diligence on adaptation and incentivized public procurement could play pivotal roles in fostering a more resilient business environment.
Despite the clear risks, several barriers hinder effective business-led adaptation. These include the perceived irrelevance of immediate climate risks, insufficient climate data and the high costs associated with implementing adaptation strategies. To overcome these obstacles, Mikaelsson advocated for a collaborative approach involving enhanced governmental support through policy adjustments and financial incentives to facilitate essential adaptations.
Mikaelsson concluded his presentation, the call to action was clear: it is imperative for both policymakers and business leaders in the Nordics and beyond to forge robust adaptation strategies that safeguard essential supply chains against the inevitable impacts of climate change.
Feature / Mikaelsson discusses the first-of-its-kind assessment, emphasizing the urgency of adapting policies to mitigate climate risks.
Other publication / This white paper contributes to the evidence base on the risks that European trade links and global value chains face from climate change.
Past event / SEI experts will provide input on key climate change topics at the forefront of UNFCCC discussions.
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