Investors who prioritize a quick payback period are less likely to make investments that yield results in the medium or long term, and a compelling business case is needed to gain support for climate-friendly measures in the supply chain. This is evident, among other things, from the recent study, the 2022 Emerging Priorities in Supply Chain Survey.
Some Chief Supply Chain Officers (CSCOs) do not view climate change as a risk and do not invest in risk identification, modeling, and improvement measures. This is shown in a recent study by Gartner, 2022 Survey on Emerging Priorities in the Supply Chain. The survey shows that 11 percent of the companies surveyed do not view climate change as a future risk at all. According to Gartner, two factors determine how much companies are willing to invest to increase the sustainability of their supply chains. One factor is the time horizon and the owners’ expectations regarding the payback period for their investments. Investors who want a quick return and therefore focus on immediate profitability are less likely to make investments that yield results in the medium or long term. The second factor influencing the willingness to invest in reducing climate impact is how compelling a business case supply chain leaders can present.
To convince the company to invest in a more sustainable future, Gartner recommends that CSCOs take the following two steps:
- Integrate climate risks into strategic decision-making.
- Show the costs of historical disruptions.
According to Gartner's study, 2022 Survey on Emerging Priorities in the Supply Chain, risks related to climate change have not yet been taken into account at all in the decision-making processes of 9 percent of the participating companies. According to the report’s authors, it is important to raise awareness among senior management (C-suite) that there is a growing expectation from a range of stakeholders that profitability be sustainable, as well as to raise awareness of the actual costs of historical disruptions that have occurred.
