A hotter world is threatening these key commodities

A recent PwC study forecasts that, even if the world takes substantial action to curb emissions, the dual threats of heat stress and drought will have a profound effect on the production of nine metals, minerals and foods on which society and business depend. The research found that current production sites for each of the commodities studied—metals essential to industrial manufacturing, minerals critical to the green transition and crops that supply 42% of human caloric intake—will face dramatically higher exposure to those two climate threats by 2050, even in an optimistic scenario in which global temperature rise is contained to two degrees Celsius. Specifically, this means more intense and prolonged episodes of extreme heat and humidity, which affect the health and productivity of farm and mine workers, as well as more frequent and extended periods of drought, which can depress crop yields and disrupt water-intensive operations like lithium mining. 

The implications for global supply chains, and for businesses that depend on these commodities directly, represent an urgent call to action for the C-suite. Leaders should focus on three courses of action:

• Enhance resilience. Leading companies take a structured approach to anticipating, managing and recovering from climate shocks. Start by identifying risks relevant to your business and operations, including risks in supply chains. These may extend beyond immediate climate threats to include impacts such as new regulations or changes in market prices spurred by anticipated shortages. Next, plan adaptation measures, working with others to implement them, and look for technology solutions to support production at scale and prepare for rising risk exposures.

• Capitalise on opportunities. Mitigating the impacts of heat stress and drought can catalyse unexpected opportunities. Leading companies are investing in research, exploring innovative products and services, and collaborating to develop and deploy new solutions in response to rising heat and drought pressures. In the agriculture sector, for example, technology systems (often powered by artificial intelligence) provide insights on activities such as crop planning, disease control and nutrition.

• Plan to collaborate, and collaborate to plan. A PwC study of top-performing companies finds that in general organisations with relatively strong profit margins and revenue growth were more likely than other companies to participate in business ecosystems. But the potential of collaboration extends beyond financial performance: it can also boost climate resilience and open the path to a wider range of climate solutions. Seek out partners such as governments, investors, academics and local communities when planning climate adaptation initiatives. Ecosystem engagement can lead to both better outcomes and a stronger position in the market.