A business may depend on raw materials directly, through the products it makes, or indirectly through packaging, ingredients, components, buildings, equipment, and services.
Drought, heat, floods, storms, wildfire, pests, and ecosystem decline can affect the availability, quality, and price of the materials businesses depend on. This can make it harder or more expensive to source ingredients, crops, timber, minerals, fibres, packaging materials, or other inputs needed to produce goods and deliver services.
Vulnerabilities
What are the risks to a business's raw material supply?
The climate and nature pressures that can make materials harder to source, lower quality, or more expensive.
These risks matter for businesses that depend on agricultural ingredients, timber, fibres, fish, minerals, metals, packaging materials, or nature-based products. They can also affect businesses that do not buy raw materials directly but depend on suppliers who do.
How exposed are raw material sources?
How exposed business suppliers, sourcing regions, and material flows are to climate and nature risks.Â
A business may be more exposed if key materials come from heat-exposed farms, drought-stressed basins, fire-prone forests, flood-prone mining regions, degraded landscapes, or climate-sensitive fisheries. Exposure is also higher when supply is concentrated in a small number of countries, regions, suppliers, or transport routes.
If many businesses depend on the same place for a key crop, mineral, fibre, or ingredient, one local shock can create wider shortages and price increases.
Mapping where the most important materials come from, and how concentrated those sources are, can help show where disruption is most likely to start.
How sensitive are businesses to raw materials disruption?
How much a business relies on raw materials being available, affordable, and high quality.
Some businesses are highly sensitive to raw material disruption because they depend on a narrow set of ingredients, crops, fibres, minerals, or components. Even a modest fall in quality, harvest volume, or material availability can affect production, product quality, costs, and customer delivery.
A business may be more sensitive if there were fewer substitute materials, limited supplier diversity, low stock levels, little traceability, tight product specifications, or fixed production schedules.
Sensitivity can also be high where materials depend on specific harvest windows, long growing cycles, or specialist processing.
How could raw material disruption create wider knock-on effects?
How material shortages can create wider knock-on effects across costs, contracts and markets.
Raw material disruption rarely affects only one supplier. A drought can reduce crop yields, raise prices, increase competition for alternatives, and affect processing capacity. A wildfire can damage forests, close roads, reduce timber supply, and affect construction or packaging markets. A flood can disrupt mining, transport routes, storage, and port access.
When supply tightens, businesses may face higher costs, lower quality, delayed orders, contract pressure, and competition for alternative suppliers. In some cases, governments may restrict exports or introduce new rules to protect local supply, creating further uncertainty.
