G7 economies increasingly exposed to climate risks through globalised supply chain

This report by Zero Carbon Analytics examines how G7 economies are exposed to cross-border climate risks due to the interconnected nature of global supply chains. It highlights that extreme weather events in production hubs—particularly in Asia, Africa, and Latin America—can cause global price spikes, industrial production declines, and threats to food security in industrialised nations. The document argues that because manufacturing is often offshored to lower-cost regions, G7 nations must cooperate internationally to fund climate adaptation in developing countries to secure their own supply chains.

• Global supply chain interconnectedness allows climate-related disruptions at extraction and production sites to reverberate across borders, affecting trade, finance, and food systems. A historical example is the 2011 Thailand floods, which caused USD 40 billion in economic damages locally and led to a 2.5% reduction in global industrial production, with hard disk drive prices increasing by 80%-190% for six months.
• Sea level rise threatens global logistics infrastructure, specifically coastal ports. Approximately 90% of global freight is moved by ship, and most of the world's 2,738 coastal ports are vulnerable because their wharves are typically located between a few feet and 15 feet above sea level. The global cost to adapt these ports by 2050 is estimated between USD 22 billion and USD 768 billion.
• The United States faces significant supply chain vulnerabilities due to the offshoring of manufacturing, which has created opaque chokepoints. Specific risks include nearly one-third of the largest airports having runways at risk from storm surges, and the Information and Communication Technology (ICT) sector's reliance on Chinese manufacturing concentrated in high-flood risk eastern river basins.
• Germany and the UK face substantial economic and food security risks from international trade. Germany's GDP could decrease by 0.01% to 0.35% annually by 2050 due to global climate consequences, with heat stress in Southeast Asia alone potentially triggering GDP losses of up to 0.46%. The UK imports food from over 160 countries, with 18% of its fruit and vegetables coming from moderately or highly vulnerable nations like Brazil, India, and South Africa, potentially leading to a 20% increase in food prices by 2050.
• Japan's economy is highly dependent on just-in-time supply chains for electronics and automotive manufacturing, which are vulnerable to tropical cyclones, flooding, and storm surges in Southeast Asia. Additionally, Japan is exposed to US climate risks through the import of agricultural products used for meat feed production.
• Mitigating supply chain risk requires global cooperation and funding for adaptation in developing nations, as industrialised countries rely on them for low-cost production. For example, US solar manufacturing relies on China because labour costs are significantly lower (USD 6.20 per hour in China versus up to USD 52 in the US). To address this, 200 governments at COP26 agreed to increase adaptation funding to approximately USD 40 billion per year by 2025, with the G7 expected to provide the majority.

APA

Team, Z. (2022). G7 economies increasingly exposed to climate risks through globalised supply chain. Zero Carbon Analytics. https://zerocarbon-analytics.org/finance/g7-economies-increasingly-exposed-to-climate-risks-through-globalised-supply-chain/

Chicago

Team, ZCA. G7 economies increasingly exposed to climate risks through globalised supply chain. Zero Carbon Analytics, 2022. https://zerocarbon-analytics.org/finance/g7-economies-increasingly-exposed-to-climate-risks-through-globalised-supply-chain/.

Wikipedia

{{cite report |last1=Team |first1=ZCA |title=G7 economies increasingly exposed to climate risks through globalised supply chain |publisher=Zero Carbon Analytics |date=16 June 2022 |url=https://zerocarbon-analytics.org/finance/g7-economies-increasingly-exposed-to-climate-risks-through-globalised-supply-chain/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{team2022economies, author = {Team, ZCA}, title = {{G7 economies increasingly exposed to climate risks through globalised supply chain}}, institution = {Zero Carbon Analytics}, year = {2022}, month = jun, url = {https://zerocarbon-analytics.org/finance/g7-economies-increasingly-exposed-to-climate-risks-through-globalised-supply-chain/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }