Climate Change Risks and Supply Chain Responsibility

What role can companies play in strengthening the capacity of small-scale producers in developing countries to adapt to climate change, and in doing so, make their global value chains more resilient?

While some leading companies have made progress in taking greater responsibility for what happens throughout their supply chains, there has been little discussion about the threat that climate change poses to the livelihoods of small-scale producers.

Through interviews with three companies: Starbucks, Marks & Spencer, and The Body Shop, the paper examines how smallholders involved in coffee production in Colombia, sesame in Nicaragua, and cotton in Pakistan have been affected by climate change and what it means for the companies’ businesses.

From this research, Oxfam identifies key actions for companies to begin to address the challenges to small-scale producers, and raises questions for further discussion.

Introduction
What happens when floods, droughts or disease wipe out the crops of small-scale farmers? What does it mean for their livelihoods and food security, and for the wider community? And, where small-scale farmers are selling into global value chains, how do companies respond when adverse weather events affect production? With climate change driving such events to become more frequent and more intense, this discussion paper explores these pressing questions.

While focusing on adaptation, the case studies presented in the paper are also a reminder that strong international action over the next few years is essential to reduce global greenhouse gas emissions and prevent catastrophic climate outcomes. The International Energy Agency warned in May 2012 that the door is already closing on the possibility of keeping global warming within two degrees Celsius, a limit beyond which scientists warn the climate could become unstable. Unless we change course, experts predict a 15–30 per cent decline in agricultural productivity in the period up to 2080 in developing country regions that are most exposed to climate change. But the decline could be as much as 50 per cent for some countries.

Although much of the discussion around climate change focuses on future risk, Oxfam is aware that in developing countries, hundreds of millions of farmers – many of whom are women – and their communities are already suffering from the effects of changing weather patterns on their livelihoods. Many areas are witnessing increasing frequency of natural disasters, food shortages and drought, with adverse impacts in areas such as health, water and food security. Almost without exception, the countries that already struggle to feed their people are the most affected by climate change. Poor rural women, who often have fewer livelihood alternatives and fewer rights over productive resources such as land and water, are the most vulnerable to crises and are likely to be hardest hit when a climate-related disaster occurs.

This discussion paper has attempted to provide insights into how climate change is affecting small-scale producers in developing countries today, and the role that companies can play in strengthening the adaptive capacity of these producers and in doing so make their global value chains more resilient. But much more work needs to be done on how companies can best invest in building small-scale producers’ adaptive capacity – especially for retailers, who are often one step removed from primary production.