Why should supply chain professionals prioritize climate resilience now?

Climate-related disruptions are increasing in frequency and severity, affecting transportation routes, facility operations, and raw material availability. Marsh's guidance emphasizes that climate resilience is no longer optional—it's essential for operational continuity, regulatory compliance, and stakeholder confidence. Delays in adaptation increase exposure to both physical and financial risk.

What are the five steps outlined by Marsh for strengthening supply chain climate resilience?

While the article title references five specific steps, the full methodology includes assessing climate risk exposure across suppliers and facilities, diversifying sourcing to reduce geographic concentration, investing in climate-adaptive infrastructure, leveraging data and scenario planning tools, and building supply chain redundancy and flexibility. Organizations should conduct vulnerability audits and prioritize interventions based on risk exposure.

How can companies identify which suppliers and facilities are most exposed to climate risk?

Marsh recommends a structured risk assessment approach: map supplier and facility locations against climate hazard maps (floods, droughts, extreme heat, storms), evaluate historical disruption frequency, assess local infrastructure resilience, and score suppliers on climate adaptation measures. Geographic concentration in climate-vulnerable regions should be flagged for diversification.

What role should scenario planning play in supply chain climate strategy?

Scenario planning allows supply chain teams to stress-test their networks under different climate futures. Organizations should model disruptions to critical routes, simulate multi-supplier outages, and evaluate capacity constraints under climate-stressed conditions. This enables proactive mitigation rather than reactive crisis management.

How does climate resilience tie to procurement and supplier management?

Procurement teams should integrate climate risk into supplier selection criteria, conduct due diligence on supplier climate adaptation measures, and negotiate contracts that account for climate volatility. Diversifying the supplier base geographically reduces concentration risk, while collaborative partnerships enable joint planning for climate adaptation.

Sustainability & ESG

High Impact

5 Steps to Build Climate-Resilient Supply Chains

May 7, 2026

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Marsh has published guidance on five critical steps for organizations to enhance supply chain resilience in the face of escalating climate risks. This framework addresses the growing reality that climate-related disruptions—from extreme weather events to resource scarcity—pose material threats to global supply networks. The guidance is timely as companies face increasing pressure from stakeholders, regulators, and insurers to demonstrate climate preparedness.

The article underscores a structural shift in supply chain management: climate resilience is no longer an optional sustainability initiative but a core operational requirement. Supply chain professionals must integrate climate risk assessment into sourcing decisions, supplier evaluation, facility planning, and inventory strategy. Organizations that fail to build climate redundancy into their networks risk facing costly disruptions, regulatory penalties, and competitive disadvantage.

For practitioners, the implications are significant. This guidance signals that supply chain teams must collaborate with risk management, sustainability, and procurement functions to map climate exposure across their networks, diversify sourcing geographies, invest in predictive analytics, and build adaptive capacity into logistics infrastructure. Companies that embed climate resilience into their supply chain strategy now will be better positioned to navigate future disruptions and capture competitive advantage.

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Frequently Asked Questions

What This Means for Your Supply Chain

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What if a major supplier region faces drought-induced production outages?

Model the impact of a 6-month production shutdown at suppliers concentrated in a climate-vulnerable agricultural region. Assess inventory depletion, lead time extensions from alternate suppliers, and cost inflation. Evaluate whether current safety stock and diversification strategy adequately cover the disruption.

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What if climate impacts extend lead times by 3-4 weeks?

Simulate the operational impact of climate-driven delays to transportation corridors (port congestion from weather, rail disruptions, inland waterway restrictions). Model how extended lead times affect inventory levels, forecast accuracy, and service levels. Determine what inventory buffer is needed to maintain target service levels.

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What if facility climate exposure requires network rebalancing?

Model the cost and service impact of relocating warehouse or distribution capacity away from climate-exposed regions (flood zones, hurricane corridors, extreme heat areas). Calculate facility investment requirements, transportation cost changes, and service level implications across customer segments.

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