The Sound of Silence-Assessing the socioeconomic exposure to nature-related risks in German supply chains

This paper explores the socioeconomic exposure to nature-related risks (NRR) in Germany. Therefore, the research proposes to revisit the intricate relationship between nature and the economy to establish a conceptual framework. Adopting a strong sustainability perspective, the conceptual framework underscores the critical role of nature’s contributions to the economy, making use of Herman Daly’s (1995) inverted pyramid. Highlighting material dependencies on ecosystem services (ES) and anthropogenic impacts, this study assesses Germany’s exposure to NRR by mapping the distribution of risks across the global production network. Based on previous research by Hadji-Lazaro et al. (2023) and Svartzman et al. (2021) and utilising the multiregional and environmentally extended input-output table EXIOBASE 3, the research assigns materiality scores to various sectors based on the ENCORE framework (2021, 2024), revealing significant exposures in exports, private, and public revenues as well as employment-related indicators. The findings indicate that exports are the most exposed. In employment terms, high-skilled workers and female employees seem generally less affected. Water-related ecosystems and the climate are identified as the most impacted while also the most critical when providing ES. Sector-specific analysis highlights processing and manufacturing as high-risk areas, with the Construction sector amplifying risks throughout the economy. The study advocates for a precautionary approach that embeds economic activities within biophysical limits to address biodiversity loss and rising emissions. Additionally, the findings underscore the dynamics of contagion along the network structure of production whereby effects are not geographically contained but rather spill along the supply chain. Further research should investigate the results in a temporal and spatially explicit perspective. Policies aiming at structural change can benefit from this analysis in analysing the key role of certain sectors, as well as the importance of ES in particular supply chains. Thus, the research is an initial step in assessing NRR to be extended with further perspectives on the likelihood of risk materialization alongside adaptive capacities.