Dr. Scott Kelly, Senior Vice President of Model Development and Analytics at climate-analytics firm Risilience, is set to provide vital testimony before the Hearing of the Committee on the Budget on Wednesday October 25th, 2023 at 10.00am EDT. Dr. Kelly will respond to questions relating to the pressing issue of climate-related risk and its financial impact on global supply chains.
In his testimony, Dr. Kelly will emphasize the critical importance of understanding the connection between climate change and the resilience of supply chains in today’s interconnected world.
He will acknowledge the substantial economic value that the United States derived from global Trade, with exports contributing $3 trillion to the country’s GDP in 2022. Significantly, imports are vital for securing the raw materials, commodities, and products necessary for a healthy and robust economy.
Dr. Kelly will point out the inherent vulnerability of supply chains to the physical effects of climate change, supported by a meta-analysis of peer-reviewed research, as well as research conducted by Risilience.
He explains: “Such supply chains, especially those relying on specialized products and critical infrastructure, are at acute risk of disruption from climate-related weather events, as 80 percent of trade goes through ports.
“The direct impacts of extreme weather can cascade through supply chains, leading to rising costs for businesses, with studies finding that at least half of the recent increases in inflation can be attributed to supply-chain disruption.”
One notable example Dr. Kelly will discuss tomorrow is the microchip industry. Taiwan is the world’s largest producer of microchips, with production accounting for over 90 percent of the world’s most advanced microchips, and is highly vulnerable to the physical impacts of climate change, including typhoons and water scarcity. Stronger storms, due to rising sea-surface temperatures, can cause considerable damage, and water-dependent processes, like microchip fabrication, are at risk due to climate change. The industry is vital for numerous sectors, including the manufacturing of smartphones, vehicles, and military hardware.
The waterfall effect of climate-induced disruptions points to a significant drop in semiconductor inventory in the US, from 40 days in 2019 to less than five days in 2021. Any climate impacts in Taiwan could lead to significant consequences in the US, affecting multiple parts of the economy.
Dr. Kelly concludes: “There is a critical need for both businesses and the US government to act; to mitigate and adapt to climate-related risks.
“Resilience and sustainability must become a cornerstone of supply-chain strategies, and incentives should be provided to promote the disclosure of material financial risks. Such measures will contribute to the safeguarding of the US and the global economy from the impending challenges posed by climate change.”
Dr. Scott Kelly’s testimony before the Senate Budget Committee on climate risk and supply chains promises to shed light on the urgent need for action in this ever-changing global landscape. His insights will undoubtedly resonate with policymakers, business leaders, and the public alike, as they each navigate the path toward a more sustainable and resilient future.
