Sustainable supply chains are now central to business resilience and long-term value. Climate events, water stress, human-rights concerns, pressure on natural resources, geopolitical disruption and changing regulation can affect suppliers, costs, cash flow and continuity.
This research identifies a persistent gap between rising exposure and organisational preparedness. It finds that greater visibility across suppliers and locations, stronger testing of supplier information and earlier warning of disruption can support better-informed decisions.
Organisations are recognising more sustainability risks, but preparedness does not always keep pace. Greater visibility across suppliers and locations can help organisations understand dependencies, spot emerging risks and make better-informed decisions.
Seeing further into the supply chain matters. Human-rights conditions, water dependency and other sustainability risks can become harder to understand beyond direct suppliers. Supplier information is an important starting point, but it may need to be tested against other evidence to give organisations a clearer view of exposure.
Environmental and social risks
A supply chain can look efficient until the conditions around it change. A heatwave can increase labour costs, an energy shock can change where materials are sourced, and scarcity can push up the price of critical inputs. These pressures are already turning sustainability issues into operational and financial decisions.
Resource risks relate to the availability and cost of critical inputs, where scarcity can push up prices, constrain supply and increase competition for materials. Resource and materials scarcity emerged as the most frequently identified high-impact sustainability risk, selected by 43% of respondents.
Physical climate risks can affect people, assets and operations directly – for example, extreme heat can reduce labour productivity and increase costs, while storms or flooding can disrupt sites and transport. These were ranked second, selected by 38% of respondents.
34% selected transition risks which arise as economies move towards lower-carbon models, with changes in energy prices, emissions requirements, regulation and technology affecting sourcing and investment decisions.
Water risk can travel quickly through a supply chain. A drought can reduce agricultural output, flooding can stop a factory or cut transport links, and water stress can interrupt production at suppliers that depend on a reliable supply. The disruption may happen far from an organisation’s own operations, but the consequences can still reach costs, output and continuity.
Only 11% of respondents described their organisations as fully of very prepared for water-related supply-chain risks.
Supply chains can stretch across countries, industries and communities, connecting organisations with people they may never see directly. A retailer may know its immediate clothing supplier, for example, but visibility weakens sharply beyond direct suppliers. That loss of visibility is reflected in the survey. Information may exist, but organisations need to understand how far it reaches and whether it can be relied on.
The barriers are not solely about the availability of data. Globally, the most commonly identified barrier is that human rights are not being prioritised in procurement decisions, selected by 18% of respondents. Supplier cooperation and the lack of common standards also constrain visibility.
Building more resilient supply chains
Greater visibility can show an organisation where supply-chain risks are building, but visibility on its own does not prevent disruption. The challenge is to spot those signals early enough to act. Digital tools can help by combining weather data, sensors and supplier information to show where conditions are changing. AI can then help identify patterns and emerging risks across large amounts of data. The research shows that 32% of respondents see the greatest opportunity in using these tools to anticipate disruption earlier, giving organisations more time to assess the impact, consider alternatives and respond before the problem becomes more serious.
Public sector: using procurement to drive change
Building more sustainable supply chains is part of resilience. Governments can influence the conditions in which suppliers operate through incentives, standards and enforcement, but they also have another powerful lever: their own purchasing decisions. Public procurement can turn wider sustainability ambitions into practical expectations for the organisations supplying public services.
Opportunities for finance and the accountancy profession
For finance, the opportunity is to connect these sustainability issues with business performance and value. Climate exposure, water dependency, worker conditions, supplier information and policy change can all affect cost, cash flow, continuity, investment and reputation.
For the accountancy profession, the priority is to connect sustainability evidence with scenarios, procurement, due diligence, investment, controls and governance so that organisations can identify where value is at risk, strengthen resilience and support long-term value creation.
By bringing those insights into scenarios, procurement, due diligence, investment and governance, finance can help organisations understand both where value may be at risk and where new value can be created.
The aim is practical: move beyond reporting and compliance towards decisions that strengthen sustainable supply chains, improve business resilience and support long-term value creation.
