Terms of Reference: ROI Security of Supply Analysis
Introduction
Background
Climate impact in producing regions and declining farmer viability, are impacting volatility of prices and production, threatening the long-term security of supply in coffee and cocoa. The financial exposure for companies is growing fast, leading to, amongst others record high prices for coffee and cocoa, increasing internalised risks costs for companies across the supply chains, and production volatility impacting all actors, including farmers, along the value chain.
Despite growing awareness about risks and impact, mitigation efforts remain siloed and insufficient. Company-level responses often constrained to traceability, certification, or short-term resilience projects do not address the root causes of vulnerability at supply shed level. As such, they fail to shift the structural risk profile of the sourcing landscapes. At the same time, global companies, producing countries as well as consumers are increasingly concerned that current mitigation efforts will not be sufficient to manage risks, impacting production volumes, quality, margins and prices.
As part of its new strategy (2026-2030) IDH will convene supply chain actors and facilitate a safe dialogue amongst supply chain actors on what changes in doing business are required to support long term collective solutions and de-risk supply without duplicating efforts. To inform such a dialogue, IDH will invest in an analysis of the cost of (individually) absorbing security of supply risks, versus the costs of collective pre-competitive investment in mitigating supply risks.
Role
IDH is looking for a service provider to undertake the above-mentioned analysis. More specifically, the analysis should quantify how long-term supply risks driven by climate change, socio-economic instability, and other systemic shocks could impact the financial performance (P&L, balance sheet) of companies in key agricultural commodity sectors. The analysis will quantify the financial risks of inaction and build a compelling business case for collective investment in supply shed solutions.
The analysis will:
- Identify key supply-side risks (e.g., stranded assets, declining yields, loss of farmer base, trade disruptions);
- Translate those risks into financial outcomes using an economic model;
- Run future scenarios to show how these risks might evolve;
- Be presented in a way that resonates with C-suite decision-makers, to help them understand the long-term consequences of inaction or mismanagement; and
- Build on initiatives working on security of supply within in, or relevant to agri-commodities.
The ToR details the full scope of the assessment, including the objectives and proposed evaluation questions, key deliverables, timelines, and guidance on utilising the accompanying annexes.
Deadline for the submission of proposals is 19 September, 18:00 CEST, by email to Carla Vaz: vaz@idhtrade.org