Climate Change and Adaptation in Global Supply-Chain Networks

Category: Finance Brown Bag Seminar
When: 12 June 2019
, 14:00
 - 15:00
Where: HoF E.20 ("DZ Bank")
Speaker: Nora Pankratz

Authors: Nora Pankratz (Maastricht University) and Christoph Schiller (Rotman School of Management, University of Toronto)

Title: Climate Change and Adaptation in Global Supply-Chain Networks

Abstract: This paper examines how firms adapt to climate-change risks resulting from their supply-chain networks. Combining a large sample of global supplier-customer relationships with granular data on local temperatures and flooding incidents, we first document that the occurrence of climate shocks at affected supplier firms has both a large direct and indirect negative effect on earnings and revenues of suppliers and their customers. Second, we show that customers are 10% to 20% more likely to terminate existing supplier-relationships when realized climate shocks at the supplier firms exceed ex-ante expected climate shocks. Further, customers subsequently switch to suppliers with lower heatwave and flooding exposure. Our results indicate that climate change affects the formation of global production networks.