Our key takeaway: The link between climate-driven hazards - like droughts and heat stress - and supply chain-related disruptions and risks is undeniable in nine key commodities: vital metals (iron, aluminium and zinc); critical minerals (cobalt, copper and lithium); and food crops (maize, rice and wheat). A recent report by PWC finds that extreme heat stress reduces labour productivity by at least 75% and is dangerous to outdoor workers’ (such as miners and farmworkers) heath, safety and wellbeing. Not to mention that certain key commodities (such as 90% of rice production) will face greater heat stress risk by 2050 in a high emissions scenario. Underpinning all of this is the fact that commodity production is highly concentrated in specific regions within a handful of countries. This exacerbates the risk of climate-related disruptions to global commodity supply chains. With this in mind, the report emphasises the importance of adaptation measures, alongside mitigation measures such as emissions reduction, to secure global commodity supply chains. Gim Huay Neo, Managing Director of Centre for Nature and Climate at the World Economic Forum, issues a call to action: “Businesses need to prepare for a climate reality where production and supply chains, including that of critical commodities, will be increasingly at risk of significant disruption.”
PWC published its report on Climate risks to nine key commodities: Protecting people and prosperity (May 2024):