How climate risk is impacting cross-border supply chains
From floods to hurricanes, extreme weather is forcing businesses to rethink how they move their goods.
When extreme weather events hit critical production hubs or transport routes, it can delay shipments, damage infrastructure, reduce output and push up costs – effects that often ripple far beyond the market where the disruption began.
As a result, isolated weather events can trigger systemic shocks across tightly interconnected global supply chains. The most acute impact is often felt in emerging markets across Asia, Africa and the middle East due to their geographical location, infrastructure gaps and limited financing capacity
From past shocks to more recent disruptions, the scale of this risk is increasingly evident.
“A decade ago, severe floods in Thailand disrupted supply chains across Southeast Asia,” said Dr Linda Yueh, CBE, an Independent Non-Executive Director on the Board at Standard Chartered, who appeared on the second episode of our video podcast Studio Sessions.
“The flooding reduced the economic output for markets throughout the value chain, not just in the region but around the world. It had global repercussions.”
Investment in adaptation, from climate-resilient infrastructure to better risk management, can reduce losses and ensure goods keep moving.
How should businesses respond?
For businesses, the implication is clear: climate resilience is now critical to maintaining continuity as disruption intensifies.
The lessons from previous extreme weather events are shaping how businesses prepare: mapping exposure across supplier networks, building alternative capacity (through approaches such as dual sourcing), and diversifying logistics routes – alongside, where necessary, holding buffer stocks to absorb short-term disruption.
While these measures can strengthen resilience, they often come with higher costs or operational complexity, requiring businesses to balance efficiency with risk mitigation.
“We are thinking about this as a structural change, and every business in the world is going to have to confront this risk and ask: ‘what does that mean for my business model? What does it mean for my clients? What does it mean for my supply chains?,’” said Professor Nicola Ranger, Executive Director of Earth Capital Nexus.
Adaptation is about reducing risk. But it is also more than that. This is a new business opportunity. This is about a shift in thinking about how to support clientsProfessor Nicola RangerExecutive Director, Earth Capital Nexus.
Beyond risk mitigation, adaptation at scale can also deliver economic benefits. Research from our Adaptation Economy Report found that for every USD1 spent on adaptation this decade, an economic benefit of USD12 could be generated.
How we can support
For banks, supporting clients to integrate adaptation into supply chains offers a dual benefit: strengthening resilience while unlocking new sources of value.
In March 2026, Standard Chartered closed a USD 435 million sustainability-linked deal with the global agribusiness COFCO International, , aimed at strengthening agricultural supply chains in South America – a key global food and feed corridor
The financing supports improved land-use governance, responsible sourcing, and stronger supply-chain oversight. While barriers remain, financial institutions and investors are increasingly recognising their role in directing capital towards markets most exposed to physical climate risks.
Our Guide for Adaptation and Resilience Finance, shows that mobilising capital at scale through blended finance and partnerships with governments and multilateral development banks, and improving data, disclosure and common frameworks creates a more investable market.
“Common frameworks help us identify credible adaptation activities, assess resilience outcomes, and then give clients greater confidence that these can be recognised and financed appropriately.” Alex Kennedy, Managing Director, Head of Sustainable Finance Solutions at Standard Chartered, and Chair of our Adaptation Finance Innovation Hub.