Schneider Electric: Embedding Supply Chain Risk Management

As the global economy faces ongoing disruption from floods, heatwaves and storms, it is no longer a question of whether to adapt but how quickly.

Physical climate risks could erase up to 10% of industrial companies’ annual EBITDA and 18% of global GDP by 2050.

For businesses with international supply chains, climate change is a present threat and adaptation must become a central strategic pillar.

“As we accelerate efforts to limit global warming mitigation remains absolutely critical” says Esther Finidori, Chief Sustainability Officer at Schneider Electric. “We must keep cutting emissions and scaling clean technologies. But climate change is already shaping our reality and adaptation is no longer optional.

“At Schneider Electric we’re embedding adaptation into our strategy to protect operations strengthen supply chains and unlock innovation. From risk identification to vulnerability reduction real-time detection and effective response we’re building resilience that promotes long-term growth. We also guide our customers to do the same with risk management and resilience strategies.

“Why? Because mitigation and adaptation go hand in hand. Companies that act early avoid losses secure continuity and create new opportunities in a changing world.”

Quantifying climate risk across the value chain

While mitigation addresses the causes of climate change, adaptation focuses on its consequences. The Intergovernmental Panel on Climate Change (IPCC) defines climate physical risk through three interconnected factors: hazards exposure and vulnerability.

As a global manufacturer, Schneider Electric has integrated this approach into its enterprise risk management framework. By combining on-site audits with scientific data and scenario modelling, Schneider Electric's Environmental Risks team quantifies the material impact of climate hazards across its global network of operations and suppliers. This data-driven strategy can turn a risk profile into a platform for innovation.

Building end-to-end supply chain resilience

Schneider Electric has developed an end-to-end resilience plan. A key component is supplier mapping, which identifies geographic vulnerabilities within the supply base. This allows Schneider Electric to create diversification plans such as its Power of Two strategy, which ensures alternative production sites are available for critical components.

This strategy supports specific targets for operational continuity. By 2025 Schneider Electric aims for 90% of its critical offers to have dual manufacturing capabilities. It also plans for all its major distribution centres to be able to reroute 80% of flows within five days of a disruption. These measures secure the supply chain and ensure customer reliability.

Data and collaboration for operational security

Predictive weather analytics provide early warnings to Schneider Electric sites, allowing them to activate continuity plans. This is vital as analysis suggests over half of Schneider Electric's 521 sites may face high climate hazard exposure by mid-century, making these systems decisive for operational security.

True adaptation extends beyond a company’s own facilities. Schneider Electric collaborates with suppliers and peers on platforms like the World Business Council for Sustainable Development (WBCSD) to share insights.

Schneider Electric also finances ecosystem restoration through the Livelihoods Carbon Funds, enhancing resilience for 1.5 million people. Robust adaptation planning is a financial imperative that positions companies to thrive amid disruption.