.
Climate change and supply chains: Summary
- Extreme weather events are causing global supply chains to be disrupted by climate change
- The vulnerability of the food system is increased by hidden infrastructure such as data centres
- In many parts of the world, data centres that are outdated fail due to rising temperatures
- Climate shocks cascade across logistics networks creating widespread operational risks
Extreme weather conditions are threatening the livelihoods of farmers and crop yields as a result of climate change. There is no doubt about it.
Consider the cocoa crisis of recent years: intense heat and heavy rains have driven West African cocoa production to historical lows. Prices for cocoa are soaring, and chocolate manufacturers are scrambling. Look at Indonesia where floods caused palm oil production to be disrupted, forcing manufacturers to find alternative supplies.
When extreme weather strikes, not only are fields and factories at risk. Hidden infrastructure is integral to the food industry, but it’s never on your mind. It’s also not equipped to handle climate change.
Hidden infrastructure is at the heart of all food business models
When droughts, flooding, or other climate-related shocks strike, businesses can’t afford to concentrate solely on production. It’s much easier to say than do in the middle a crisis. Nicholas Mazzei is vice president for sustainability in Europe of logistics company DP World.
It’s more than just that. Data centres are an important but often hidden part of the supply chain.
What is a Data Centre?
Data centres, which are industrial buildings designed for supporting critical IT infrastructure, such as servers, storage arrays and networking equipment, house, manage, and distribute large volumes of digital data. It is the backbone of modern digital economies, supporting essential services like cloud computing, web surfing, video streaming and new AI technologies.
Data centres are essential for everything from digitalised manufacturing to electric-powered transportation and retail stores. The IT systems that power the head offices of manufacturers are also important.
Food supply chains are immediately and severely disrupted when data centres go down. Cloud-based software is increasingly used by industry, which means that failures in these systems can quickly spread to farms, factories and logistics networks, affecting availability, price stability and food safety.
The data centres of the future are not ready for the new norm
Most data centers aren’t set up to withstand extreme weather. The extreme weather examples that the industry has today are not what we would call extreme.
Most are built for extreme weather conditions, such as 3 consecutive days of 38degC or just 2 minutes in 40degC. The definition of extreme has changed in the last few years. Mazzei says, “That is a typical summer in the Northern Hemisphere.”
Standards that are outdated “extreme” Weather can pose extreme dangers to food producers. (Lemon_tm/Image: Getty/Lemon_tm)
The data centres that were built in recent years are designed to withstand temperatures up to 40degC. This is a positive step. They are a minority. The sustainability leader explains that food operators may be using outdated risk assessments, and are therefore not ready for “even relatively normal winters or summers”.
We see examples of people meeting standards and others where they don’t. We’re also seeing too many cases where people don’t think about the physical infrastructure like data centers.
Food businesses are not aware of other weak links
Food operators are not only at risk from data centres. Import points and warehouses are not the only physical infrastructures that can be affected by extreme weather conditions. Mazzei is so concerned about extreme weather patterns that when he visits a warehouse for the first time, he always asks how hot the temperature was in summer.
We need to think about health and safety, human limits, and the right time for staff to operate.
The food industry is not taking this issue seriously enough
Nicholas Mazzei is vice president for sustainability in Europe at DP World
The logistics industry has its challenges. Mazzei, DP World’s chief executive officer, is always reevaluating the logistics system through a climate-friendly lens. He is a strong proponent of electrification and believes that the logistics system as a whole must move away from diesel trucks and planes towards rail and ships if they are to survive rising climate pressures.
It is very clear that if even one supply chain link becomes compromised by climate change, it will cause a cascade of disruptions. Mazzei confirms that he is seeing this on the ground. He explains that he can “see the entire end-to-end workflow” and points out issues at various points in the chain. Climate resilience and sustainability is part of this.
I don’t believe the food industry is taking this issue seriously enough.