Impacts and risks in supply chain operations caused by climate change

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Journal Title

Journal ISSN

Volume Title

School of Business | Master's thesis

Authors

Date

2024

Department

Tieto- ja palvelujohtamisen laitos

Major/Subject

Mcode

Degree programme

Information and Service Management (ISM)

Language

en

Pages

81 + 18

Series

Abstract

This research aims to comprehensively assess the risks and impacts of climate change on supply chain operations, covering functions from raw material sourcing to transportation operations. Climate change, resulting from accelerated greenhouse gas emissions, is a significant global concern. Existing theoretical literature on supply chains is often fragmented and tends to overlook the direct impacts of climate change. Addressing this gap, this research examines the direct and physical impacts of climate change on supply chain operations, encompassing extreme weather events and long-term implications, i.e., sea-level rise, natural resource scarcity, and extreme temperatures. The research seeks to identify climate change risks, combining them with secondary data to evaluate the materialized impacts. The focus of the study is on investigating the direct impacts of climate change and connecting them to global events materialized as described in secondary data. Utilizing the Financial Times news articles as a secondary data source, economically relevant information on materialized events across all supply chain operations and continents was collected. This study categorizes weather events into climatological, hydrological, and meteorological risk categories, additionally assessing vulnerabilities in different geographical regions regionally and globally. The findings of the research indicate an overall increase in the impacts of climate change on various supply chain operations, resulting in significant economic consequences with limited mitigation efforts. The most pronounced risks are climatological, manifesting in increased average temperature, ultimately leading to drought, natural resource scarcity and wildfires. Raw material sourcing is exceptionally vulnerable to the consequences. Additionally, scarcity of water was found to cause disruptions in manufacturing and inland water transportation operations. Hydrological risks, e.g., sea-level rise and floods, were heavily location-dependent, although they carry substantial economic damage. Floods, being the second most prevalent risk materialized, were found to cause disruptions in all supply chain operations. Meteorological risks, e.g., extreme winds and storms, emerged as a primary risk for transportation operations by land and air. Evidently, meteorological events contained secondary implications through storm-induced flooding, proving the interconnectedness of the events.

Description

Thesis advisor

Kauppi, Katri

Keywords

climate change, extreme weather events, supply chain operations, risk management

Other note

Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202401211677

Collections

[gradu] Kauppakorkeakoulu / BIZ