Supply chain as a climate asset: how to design for resilience and decarbonisation at the same time

The COVID-19 crisis dealt a crushing blow to the global supply chain, exposing its many vulnerabilities. From factory lockdowns to shipping delays, businesses were forced to navigate frequent and intense disruptions. In fact, an EY survey found that only about 2% of companies were fully prepared to tackle the supply chain crisis brought on by the pandemic. 

Even after the pandemic, the crisis has persisted, driven by geopolitical tensions, trade restrictions, and climate shocks. When it comes to the climate crisis, supply chains take the stage. Why? Because they’re responsible for more than 60% of the global carbon emissions. But this also means they hold enormous potential to be a game-changer in the fight against climate change. 

In this article, I discuss how a resilient and sustainable supply chain is a powerful climate asset, and not just an operational necessity.

From liability to asset

Because they are linear, highly dependent on open cross-border trade and low-wage manufacturing hubs, today’s supply chains are more fragile than ever. The Australian wool industry is a case in point. Due to limited on-shore processing facilities, Australia exports most of its raw wool to China, where it undergoes wet and dry processing to make it fit for global markets. It wasn’t until the pandemic that the Australian wool growers fully realised just how vulnerable their supply chains were. 

Heavy reliance on mass offshoring and single markets not only makes supply chains fragile but also carbon-intensive. About eight global supply chains, including food, construction, and fashion, make up more than 50% of annual greenhouse gas emissions. Most of these emissions come from base materials and freight transport. That’s why decarbonising supply chains and making them immune to political and climate shocks is no longer optional. Building sovereign manufacturing capabilities and switching to circular inputs and processes can help tackle Scope 3 emissions and turn supply chains into powerful assets.

The triple win

According to a 2025 EY survey, 74% of global executives reported that their supply chains have been impacted by geopolitical tensions over the last 2 years. It’s now become clearer than ever that the time to reconfigure supply chains and localise production has come. This will not only mitigate risks that come with dramatic trade policy changes or extreme weather events but also reduce freight costs, create jobs, and build circularity throughout the supply chain.

 a) Lower emissions: A company’s scope 3 GHG emissions are, on average, about 11.4 times greater than scope 1 and 2 combined. For fast-moving consumer goods (FMCG) companies, supply chain emissions can account for as high as 90% of overall emissions. This is primarily because the supplier and distribution network of a typical FMCG company are widely dispersed across geographies. Onshoring manufacturing and using greener or regeneratively grown materials can help companies reduce emissions associated with base materials and freight transport. 

 b) Greater resilience to disruption: The financial fallout of supply chain disruptions due to extreme weather events has been estimated to be more than $100 billion. To build resilience against climate shocks, companies must consider diversifying their supplier networks, localising production, and using circular materials. This will also help them future-proof their supply chains and reduce the negative impact on the environment. 

 c) Cost efficiencies over time: In the era of offshoring, companies reaped economies of scale in low-wage countries. But that chapter is closing. After the last few years of cascading disruptions, businesses are seeking ways to strike a good balance between cost efficiencies and supply chain resilience. Localising production is one way to achieve that balance. However, not all companies can make huge capital investments to set up in-house production facilities. That’s where contract manufacturing comes in. At Planet Protector, we’re helping strengthen onshore manufacturing capabilities and transform supply chains by offering contract manufacturing services to Australian businesses. 

Getting started: hidden levers for resilience and decarbonisation

Turning supply chains into a climate asset is a journey that every future-forward company must undertake. Here are three practical and high-impact actions you can take for supply chain sustainability.

• Switching freight from air to sea/rail: One of the quickest ways to drive cost efficiencies and emission reduction is to shift from air freight to a mix of ocean and inland transport. When compared to air freight, a combination of rail and ocean transport is a staggering 7 to 20 times more emission efficient. Diversifying transport modes is also a powerful way to increase resilience in the routing of goods. For example, rail has proved itself to be a highly dependable mode during the COVID-19 crisis, which caused major disruptions to air and ocean transport.
• Supplier co-location: As the name suggests, supplier co-location is a practice where manufacturers share their facilities with suppliers, warehouses, and distribution centres to accelerate production while reducing costs and environmental impact. Thanks to shorter distances between nodes, such a model has the potential to reduce freight costs by 77% and drive an 80% reduction in transport-related emissions. 
• Optimising load capacity: A significant portion of a company’s scope 3 emissions is related to logistics activities. So, any company serious about its decarbonization goals must address logistics emissions. Consolidating cargo and using space efficiently can help companies reduce the number of trips and save on fuel costs. This, in turn, can deliver substantial emission-reduction impacts.  

Case study: Planet Protector

Like many Australian companies, our supply chain was heavily dependent on offshore processing, simply because of a lack of a local option. But that has changed now. Our relentless quest to enhance sovereign manufacturing capabilities and a $4.8 million Federal Government grant have helped us set up a fibre processing facility right here on Australian soil. 

This state-of-the-art facility has enabled us to reduce freight emissions, shorten speed-to-market lead times, and most importantly, avoid offshore supply chain risks altogether. By offering contract manufacturing services, we are able to extend these benefits to other home-grown businesses.

Conclusion: The time to reimagine and reset our supply chains has come

Reconfiguring linear supply chains requires a detailed visualisation of every stage, from procurement of raw materials to final delivery and beyond. A comprehensive supply chain mapping will enable you to identify risks and vulnerabilities as well as opportunities for high-impact changes. Once you have uncovered gaps and opportunities, you can address them either through short-term solutions or long-term projects. 

Granted that short-term solutions may give you quick wins, but today's supply chains are far less predictable than before the pandemic. While short-term measures are necessary to build momentum, relying solely on them will keep you in reaction mode. A blend of quick response in times of crises and long-term reforms will set your supply chain on a path to resilience, agility, and sustainability.  

Wondering where to begin? A simple yet powerful next step is to run opportunity-mapping workshops with your teams. These sessions will help you identify hidden opportunities in your supply chain and zero in on practical ways to amplify growth, resilience, and climate impact.