Your supply chain uses nature. Is it a risk or asset?
Many businesses rely heavily on natural systems within their supply chains, from sourcing raw materials to product delivery. Increasingly, companies are realizing the critical importance of actively managing these natural dependencies to transform potential risks into valuable assets. This involves adopting 'nature-based solutions' such as agroforestry or soil health programs directly within their supply chains. These strategic investments not only enhance operational resilience and reduce environmental impact but also address the urgent need for climate action, meeting stricter regulations and investor expectations for sustainable practices.
Nature is deeply integrated into every company's supply chain, often without explicit recognition. For businesses relying on farms, forests, water, or raw materials, natural systems are fundamental. Proactively managing this relationship through "nature-based solutions" can transform potential disruptions into strategic advantages. The European Commission defines these solutions as cost-effective, nature-inspired approaches that offer environmental, social, and economic benefits, enhancing resilience and supporting biodiversity. This is crucial for urgent climate action.
In a supply chain, this means practical steps like implementing agroforestry in cocoa or coffee farms, improving soil health for food ingredients, or preventing deforestation in sourcing areas. These projects are designed to directly benefit the business, unlike generic offsets, by plugging into existing operations. This approach helps companies build long-term resilience while reducing their environmental footprint.
Company boards are increasingly recognizing vast climate and nature risks extending beyond their immediate operations. The GHG Protocol's Scope 3 Standard and the Taskforce on Nature-related Financial Disclosures (TNFD) highlight this. Investing in nature-based supply chain solutions helps manage supply security and navigate regulations like CSRD and EUDR. This is a vital part of protecting our planet and addressing climate urgency.
The starting point is mapping where your business interacts with natural systems. By using procurement and Scope 3 data, companies can identify high-risk areas or regions facing environmental stress. The Science Based Targets Network guides companies to assess, prioritize, set targets, act, and track progress, ensuring actions are meaningful and measurable.
The most effective projects deliver clear operational value first. For example, agroforestry improves farmer resilience and soil health, while watershed restoration secures water supplies. These solutions offer direct business benefits, helping to reduce climate risks to people and ecosystems. However, their effectiveness diminishes with rising global temperatures, as the IPCC warns. This underscores the urgency of early and sustained environmental action.
It's important to differentiate insetting (reducing emissions within your value chain) from offsetting (external verified credits) and pure resilience benefits. Regulators like Gold Standard and Verra are pushing for stronger evidence. Projects must be designed with audit-readiness and clear measurement from the start. Examples from Reuters and the Financial Times show companies like PepsiCo implementing these strategies, highlighting the path towards a more sustainable future and stronger environmental protection.