Supply Chain Climate Risk Assessment: Requirements, Timeline and How to Prepare

A Supply Chain Climate Risk Assessment is a report that evaluates climate-related risks across a company's supplier base. It covers physical risks (acute events like floods and cyclones, chronic shifts like temperature rise and water stress) and transition risks (carbon pricing, ESG regulation, shifting customer demand) across Tier 1 suppliers and, where visible, Tier 2 and Tier 3. The assessment supports procurement decisions, business continuity planning, and ESG disclosures under TCFD, ESRS E1, BRSR, and emerging supply-chain due diligence laws such as the EU's CS3D.

• Procurement and sourcing teams managing supplier resilience
• Sustainability teams reporting Scope 3 emissions and climate risk under ESRS, TCFD, or BRSR
• Companies sourcing from climate-vulnerable regions (agriculture, textiles, electronics, auto components)
• Exporters to EU buyers requiring supply-chain climate data under CSRD/ESRS

A Supply Chain Climate Risk Assessment typically includes:

• Supplier mapping: Tier 1, 2, and 3 suppliers by geography, spend, and criticality
• Physical risk: Exposure to floods, cyclones, heat stress, water scarcity, and sea-level rise by supplier location
• Transition risk: Carbon pricing exposure, regulatory change, technology shift, and demand transition per supplier
• Scope 3 emissions: Category 1 (purchased goods) and Category 4 (upstream transportation) emissions estimates
• Resilience actions: Supplier diversification, dual sourcing, climate clauses, and engagement programs
• Disclosure mapping: Alignment to TCFD, ESRS E1, BRSR principle 6 (environment)

• Tier 2 and Tier 3 supplier visibility is limited; most companies only know Tier 1
• Climate risk data by geography requires specialized climate modeling and GIS tools
• Supplier climate data is rarely standardized or readily available
• Mapping climate risk to procurement spend and business continuity requires cross-functional effort
• ESG frameworks (TCFD, ESRS, BRSR) have different supply-chain disclosure expectations

• Supply-chain climate template: Pre-built structure for supplier mapping, physical/transition risk, and Scope 3 estimation
• Single data ingestion: Upload supplier spend, location, and category data once; generate climate risk assessment
• AI-assisted drafting: First draft of supplier risk analysis, resilience recommendations, and disclosure-ready content
• Cross-framework output: Same supplier data feeds CBAM, ESRS, BRSR, and carbon footprint reports
• Export-ready: PDF and supplier-engagement-ready formats for procurement and sustainability teams

1. Map suppliers: Compile Tier 1 supplier list with location, spend, and criticality; extend to Tier 2/3 where possible
2. Assess physical risk: Map supplier locations against climate hazard data (flood, heat, water stress)
3. Assess transition risk: Evaluate carbon pricing, regulatory, and demand exposure per supplier and sector
4. Estimate Scope 3: Calculate Category 1 and 4 emissions using spend-based or activity-based methods
5. Build resilience plan: Prioritize high-risk suppliers; define diversification, dual sourcing, and engagement actions