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Climate Change Resilience in Latin America Supply Chains

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During the launch of CDP Latin America 2018, Henrique Pereira CEO at WayCarbon, introduced the Latin America Supply Chain Resilience Index. The Index deep-dive into CDP data and adds information about climate hazards to understand how companies in Latin America are responding to current and future climate risks.

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Climate Change Resilience in Latin America Supply Chains

  1. 1. Latin America Supply Chain Resilience Index Henrique Pereira | hpereira@waycarbon.com São Paulo • Fevereiro • 2018
  2. 2. PRODUCTS & SERVICES
  3. 3. ► ► ““ The carbon intensity of the world economy is around USD 740 PIB/tCO2. It will be necessary to improve our productivity 10 fold until 2050. UNFCCC 2017
  4. 4. ► ► USD 353 billion USD 344 billion USD 134 billion USD 132 billion Costier year for insurers for weather disasters Costiest year ever recorded for weather disasters Insured cost of natural disasters in 2017; second- costiest year on record Economic cost of natural disasters in 2017; second- costiest year on record The impact of climate Change is material IN 2017 the economic losses were +93% higher compared to the average 2000-2016 AON - IMPACT FORECASTING 2018
  5. 5. ► ► The Global Risks Report, 2018 Extreme weather events Natural disaster Failure of climate-change mitigation and adaptation Water crisis 4 out of 5 main risks to business in the next decade
  6. 6. ► ► LATIN AMERICA SUPPLY CHAIN RESILIENCE INDEX To use the largest and most relevant database about climate change and water management in Latin America companies to identify vulnerabilities in supply chains.
  7. 7. ► ► 2014 2015 2016 2017 INVITED COMPANIES 286 520 777 989 ANSWERS (CLIMATE) 176 349 510 755 % 61.54% 67.12% 65.64% 76.34% 2014 2015 2016 2017 CLIMATE 144 236 369 455 WATER - 65 19 12 CLIMATE + WATER 32 48 122 300 TOTAL 176 349 510 767 CDP SUPPLY CHAIN LATIN AMERICA PARTICIPANTS CLIMATE PARTICIPANTS WATER +48% +121%
  8. 8. ► ► CLIMATE CHANGE | 2017 COUNTRY COMPANIES % Brazil 377 49.9% Mexico 201 26.6% Argentina 31 4.1% Colombia 22 2.9% Ecuador 22 2.9% Costa Rica 19 2.5% Uruguay 17 2.3% Chile 14 1.9% Peru 12 1.6% Panama 8 1.1% Netherlands Antilles 6 0.8% Guatemala 6 0.8% Venezuela 5 0.7% Dominican Republic 3 0.4% Paraguay 2 0.3% Trinidad 2 0.3% Guyana 2 0.3% British Virgin Islands 2 0.3% Belize 1 0.1% Jamaica 1 0.1% Honduras 1 0.1% Bermuda 1 0.1% TOTAL 755 100% CDP SUPPLY CHAIN LATIN AMERICA COUNTRIES 22 BRAZIL & MEXICO76,5% COUNTRIES HOST 95% OF COMPANIES9
  9. 9. ► ► Management includes a combination of elements of the strategy or the operation of a company, that create capacity to deal with or adapt to potential hazards. Hazards are potential occurrences of a natural or physically determined event, physical impact or tendencies that can cause loss and damage. THE INDEX METHODOLOGY CLIMATE 2017 - 2040 Natural Variability Climate Change HAZARDS MANAGEMENT +
  10. 10. ► ► HAZARDS HadGEM2- ES RCP 8.5 Met Office Hadley Centre FLOOD WATER SCARCITY HEAT WAVES LAND SLIDE
  11. 11. ► ► MANAGEMENT Risk Identification Risk Management Opportunity Identification Strategy Integration GHG Emissions Management Audit & Verification Water Management 15% 20% 15% 15% 5% 20% 10% WEIGHT
  12. 12. ► ► CLIMATEEXPOSUREINDEX CLIMATEMANAGEMENTMATURITYINDEX Brazil MexicoArgentina Belize Bermuda British Virgin Islands Chile Colombia Costa Rica Dominican Republic Ecuador Guatemala Guyana Honduras Jamaica Netherlands Antilles Panama Paraguay Peru Trinidad Uruguay Venezuela Low High STRATEGIST RESILIENTEXPOSED LAGGARD HighLow APPLYING AVERAGES TO PROJECT CLIMATE IMPACTS, IN THIS SITUATION, ISN´T A RECOMMENDED APPROACH BECAUSE CLIMATE VULNERABILITY IS GEOGRAPHICALY DETERMINED. 13 COUNTRIES HAVE SUPPLY CHAINS EXPOSED TO CLIMATE CHANGE CDP DOES NOT, CURRENTLY, COLLECT INFORMATION ABOUT THE LOCATION OF PARTICIPANT COMPANIES OTHER THAN THEIR COUNTRY OF ORIGIN. COUNTRY ANALYSIS
  13. 13. ► ► THE USE OF DATA MINING TO IDENTIFY LOCATIONS OF OPERATIONS OF THE COMPANIES PARTICIPATING IN 2017. Latin America supply chain resilience index
  14. 14. ► ► BRING ME DATA Participating Companies In 2017 755 745 4.583 With Valid Addresses in Latin America Identified Locations
  15. 15. ► ► COMPANY ANALYSIS 654 COMPANIES ARE INCLUDED IN THE SUPPLY CHAIN CLIMATE RESILIENCE INDEX IN 2017 10 COMPANIES WERE EXCLUDED BECAUSE NO VALID ADDRESS COULD BE IDENTIFIED 91 COMPANIES WERE EXCLUDED FOR NOT REACHING A MINIMUM MANAGEMENT SCORE (<0.05) CLIMATEEXPOSUREINDEX CLIMATEMANAGEMENTMATURITYINDEX Low High STRATEGIST RESILIENTEXPOSED LAGGARD HighLow Source: WayCarbon & CDP
  16. 16. ► ► LATIN AMERICA SUPPLY CHAIN RESILIENCE INDEX HIGHER DATA RESOLUTION ALLOWED FOR AN INOVATIVE ANALYSIS OF CDP’S SUPPLY CHAIN DATA: • 34% OF COMPANIES ARE CLASSIFIED AS RESILIENT OU STRATEGIST (N=222), BEING 77 COMPANIES FROM MEXICO; • ONLY 25% OF COMPANIES ARE CLASSIFIED AS EXPOSED; • MEXICAN COMPANIES ACCOUNT FOR 49% OF EXPOSED COMPANIES, FOLLOWED BY BRAZIL (23%) AND ARGENTINA (6%); • IN BRAZIL, 64% OF COMPANIES HAS LOW CLIMATE MANAGEMENT MATURITY; • IN MEXICO, THESE COMPANIES REPRESENT 55% OF PARTICIPATING COMPANIES.
  17. 17. Parque Tecnológico de Belo Horizonte | BH.tec Prof. José Vieira de Mendonça, 770, sl. 210 Tel: (31) 3401-1074 BH | SP | RJ BELO HORIZONTE | MG www.waycarbon.com

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