Revealing the risks
Research has found that in some sectors, the majority of a company’s risk exists outside of its four walls—in its supply chain and typically in the production of raw materials. WWF helps companies:
- understand the relative risk and opportunity related to commodity sourcing
- identify the social, environmental, economic and supply risks associated with commodity production and procurement
- harness insights to develop action plans to reduce potential negative impacts
- leverage market power for conservation
Risk management—the process of identifying and assessing risks and taking action to control them—has become a huge global industry. As a conservation organization, we take a different approach. WWF developed the Supply Risk Analysis to analyze significant environmental and social issues within the global production of different commodities and their countries of origin, thereby engaging a sustainable sourcing process.
The 21st century has presented humanity with an ominous reality. Today, we use the natural resources of 1.5 planets, and we are 7 billion people. By 2050, the global population is expected to surpass 9 billion—and our demands are already increasing.
Commodity production plays a key role in meeting humanity’s growing demands. It also generates some of the largest and most irreversible impacts on communities and ecosystems around the world, and poses material, reputational, and systemic risks to businesses and investors.
- Rapidly growing global population
- Climate change and severe weather events
- Accelerating consumption and dietary shifts
Environmental & Social Threats
- Land conversion and loss of habitat and biodiversity
- Improper animal care and pesticide use practices
- Higher toxicity levels and greenhouse gas emissions
- Soil and water degradation
- Social conflicts and human rights violations
- Resource shortages
- Unprecedented price volatility
- Unstable currencies
- New laws and policies
- Reputational and legal risks
- Rising insurance rates
- Growing demand for transparency
As great as the challenges are, there is enormous potential to improve commodity production and, in the course of doing so, contribute to conservation of important ecosystems, to poverty alleviation, and to the future of the private sector. After all, innovation has always been the defining force of successful business.
Supply Risk Analysis is the first step towards sustainable commodity sourcing. For many companies, the next steps in mitigating risks include joining roundtables, making commitments to purchase verified sustainable products, mapping their supply chain and working more closely with their suppliers.
The challenge is to be smarter about how we produce and what we buy and sell. Evidence is mounting that looking beyond the short-term, financial bottom line towards sustainable sourcing is not only good for communities and the environment that sustains us, but for business itself.