Proxima: Climate Risks Need to be Addressed in Supply Chains
Proxima's Global Sourcing Risk Index has placed countries like the Philippines, Indonesia, India, Colombia and Mexico on high alert for climate-related sourcing risks.
This index, developed by Proxima in collaboration with Oxford Economics, ranks regions based on their susceptibility to supply chain interruptions caused by climate and weather anomalies.
The report drew on global data and sector-specific sourcing trends, showing there is a need for Chief Procurement Officers to understand and, where necessary, reassess location decisions and resilience planning as climate volatility shapes international trade.
Five countries stand out in the report as the most vulnerable to climate-induced sourcing disturbances:
Philippines: The country is highly exposed to super typhoons and floods, posing immense threats to its food and beverage exports, notably coconut oil. Services like BPO also face growing risks, including power outages and transport disruption.
Indonesia: The world's largest exporter of palm oil (over 50% of global supply) and an expanding manufacturing hub for textiles, footwear and consumer goods. Key industrial zones are highly vulnerable to flood and drought cycles.
India: All but two of India's 29 states are regularly exposed to natural disasters including cyclones, floods, earthquakes and landslides. These phenomena have far-reaching effects, such as crop failures in key agricultural sectors and widespread disruptions in regional service industries like BPO.
Colombia: Positioned along the Andean seismic belt, Colombia faces frequent earthquakes, landslides and seasonal flooding. Major export sectors at risk include agriculture and mining, due to chronic infrastructure limitations and weather volatility.
Mexico: Confronts hurricanes, inland flooding and drought, but balances these challenges through strong infrastructure and robust adaptive capacity. Its resilience is increasingly important for manufacturing and nearshoring strategies.
Proactive planning for resilient supply chains
Simon Geale, EVP at Proxima, says: "Our report underscores the reality that weather and climate events are inextricably linked to the fabric of global trade.
"For sourcing professionals, this is not a distant risk. It is a present-day challenge that requires urgent, proactive action.
"Businesses must look beyond traditional risk matrices and factor in both immediate exposure and each market's true adaptive capacity.
"Diversifying supply sources across different geographies, holding strategic inventory and embedding data-led forecasting tools are no longer optional - they are essential for long-term resilience.
"The need for robust scenario planning has never been clearer. Our latest index is designed to help procurement leaders quantify, prioritise and address climate risks in their supply chains, so they can build both commercial and operational advantages."
Climate vulnerabilities of major economies
Even the world’s largest economies are not shielded from climate disruptions.
The US, ranked seventh, along with Australia and China, which hold the ninth and tenth positions respectively, face substantial climate vulnerabilities due to their expansive territories.
Climate disturbances in these countries can have a cascading effect across global markets owing to their crucial roles in global supply frameworks.
In contrast, European supply chains are generally situated in more stable climates.
However, they still face challenges as recent severe weather events and evolving regulations signal a pressing need to enhance sourcing strategy redundancy and bolster operational resilience.
Sectors such as food and beverage, construction and retail are particularly exposed to acute climate risks.
Many industries are accordingly transitioning from lean "just-in-time" models to more robust "just-in-case" frameworks, prioritizing supply chain diversification and resilience to ensure strategic continuity and ecological sustainability.
