Climate Adaptation Unlocking Value Chains with the Power of Technology 2025

Frontier technologies enable companies to adapt their value chains to climate change-related risks on their natural resources, assets, operations, employees and market dynamics. These factors are characteristic, to some degree, of all value chains. This chapter focuses on three key industries: food, energy and manufacturing, where the first three factors – natural resources, assets and operations – are most critical, as they present the highest cost implications and immediate, tangible opportunities for action: –Food systems value chains depend on natural resources: these systems (e.g. cereals value chain) are particularly vulnerable to environmental changes such as water scarcity and shifting weather patterns. –Energy systems value chains feature large, immovable assets: these systems face significant risks from extreme weather events that can damage infrastructure and disrupt essential services like healthcare. –Manufacturing systems value chains have complex global distribution networks and operations: these systems (e.g. automotive sector) are susceptible to climate-related disruptions at multiple stages of their supply chain. Each value chain requires tailored adaptation strategies to address its unique challenges. Looking at these three key industry systems, the following sections provide examples of how collaboration can play a critical role in overcoming the barriers to tech-driven adaptation and how this might be extended to other value chains. Focus on climate impacts in three key value chains FIGURE 6 Source: World Economic Forum and BCG analysis. Energy systems Value chains with large fixed physical assets serving localized communities e.g: Renewables Manufacturing systems Value chains with operations based on supply chain nodes and distributed manufacturing sites e.g: Automotive Food systems Value chains relying on natural resour ces and the envir onment for food production e.g: CerealsDeterioration of quality and quantity of raw materials chain networkNatural resour ces Disruption of global supply chain networkOperations Destruction or det eriorat ion of production a ssets or c apac itiesAssets Climate Adaptation: Unlocking Value Chains with the Power of Technology 12