New risk horizons: Sweden’s exposure to climate risk via international trade

The researchers found that traditional approaches provide a relatively reassuring picture, highlighting the dominant role played by geographically close trading partners (Germany, Nordic countries) whose climate vulnerability is among the lowest globally. Beyond this first tier, Sweden largely trades with EU countries and other relatively low-vulnerability markets.

However, more nuanced trade data reveal Sweden’s previously hidden links to much more vulnerable countries that play a critical role in Swedish supply chains, particularly emerging economies in Asia and Africa. These revelations add up to a new risk horizon for Sweden; global climate change threatens the stability and availability of inputs to Swedish consumption that first enter our supply chains thousands of miles away in higher-risk countries. Key trading partners in lower tiers of our supply chains play an important role in the Swedish economy and yet they have existed in a statistical shadow, meaning their influence on our own climate vulnerability has not been appreciated, until now.

The researchers’ second approach focuses on a particular Swedish supply chain: soy from Brazil. Soy has rapidly become a key commodity for Swedish consumption because of the role it plays as animal feed and an oil crop in various forms of meat and dairy and processed food production. And it is not only Sweden that has developed a love for soy. Countries at various levels of development now depend on imported soy in ways that few people realize. If climate change affects the availability and price of soy, consumers around the world will feel the effects on the cost of their weekly food shop; food and drink businesses will suffer and traders and governments will enter a costly and uncertain struggle to secure access to soy imports.

The authors therefore pioneered an approach to assess supply chain climate risk using the best available data at the highest level of granularity possible. This resulted in a mapping of climate risks to soy production at the municipality level throughout Brazil, which is then traced all the way through international supply chains to identify embedded soy in Swedish consumption. In addition, they developed a method to assess the risks that climate change poses to the transport of this soy from farm to port in Brazil, recognizing the importance of climate change “choke points” on supply chain logistics (Bailey & Wellesley, 2017) – a dimension that is rarely included in climate risk assessments of trade.

These two approaches constitute a significant innovation in multi-method assessments of transboundary climate risk. They combine to raise important new insights and questions for adaptation policy and global governance more generally. They reveal a category of climate risk that, today, is not governed by anyone.