Material scarcity shifts from procurement to boardroom as supply risks threaten future growth

Material scarcity is moving from a back-office procurement issue to a board-level concern, as companies confront pressure on supply, costs and long-term competitiveness across everything from critical minerals and packaging to water, agricultural inputs and industrial materials.

The International Energy Agency’s Global Critical Minerals Outlook 2026 underscores how quickly these dependencies are deepening. Copper is expected to deliver the largest absolute increase in demand ...

among key energy minerals, with global consumption projected to rise by about 7 million tonnes by 2040. Even with new projects in the pipeline, the agency says supply gaps remain a serious risk, sharpened by concentrated supply chains and geopolitical exposure.

That matters well beyond the resources sector. Companies in construction, textiles, electronics, food, manufacturing and infrastructure all rely on material streams that can be disrupted by long lead times, limited substitutes, rising demand and ecological constraints. The result is not merely a sourcing problem but a direct threat to margins, production schedules, investment planning and customer service.

CSE’s Research Unit has argued in its white paper, “Material Scarcity Toward 2040 and the Need for Circular Products”, that the issue should be judged through four business lenses: financial risk, supply chain risk, regulatory risk and competitive positioning. In practice, those risks are tightly linked. A shortage of one input can quickly become a cost shock, then an operational bottleneck, and finally a strategic disadvantage.

The strongest response, according to the research, is not simply to chase more primary supply. Companies also need to reduce their dependence on virgin materials. Circular economy strategies offer one way to do that by extending product life through repair and maintenance, keeping products and components in use through reuse and remanufacturing, and recovering materials through high-yield recycling at end of life.

That approach can improve resilience as well as sustainability. Keeping materials circulating can reduce exposure to raw-material price swings, create additional sources of value from existing assets and give firms more flexibility when markets tighten. It can also push product teams to design for durability, modularity and repairability rather than for short-lived consumption.

The issue is becoming more urgent as demand for copper accelerates across the energy transition and the digital economy. The IEA says electric vehicles, renewable power systems and other clean-energy technologies will drive much of the growth, while analysts have separately warned that the expansion of AI data centres is intensifying pressure on supplies. Axios reported in August that some US technology firms are already trying to bolster domestic copper processing, but that capacity remains constrained by limited funding and regulatory hurdles.

For boards, the lesson is clear: material risk cannot be left to procurement alone. Procurement may buy the inputs, but product design, operations, finance, sustainability and risk management all shape how exposed a company really is. A product built around scarce materials may need redesign; a component with a short life may need repair or reuse pathways; a supply chain concentrated in one geography may need diversification.

Boards should therefore ask five questions. Which materials are most critical to growth? Where are they sourced? Can the business use less through lightweighting, substitution or redesign? Can products and components stay in use for longer? And is material risk already embedded in enterprise risk management rather than treated as an afterthought?

Europe is already moving in this direction. Under the European Critical Raw Materials Act, the EU has set 2030 targets intended to strengthen domestic capacity, including goals for extraction, processing and recycling, alongside a limit on over-reliance on any single third country for strategic raw materials. That policy shift reflects a broader recognition that circularity and supply resilience are now inseparable from industrial competitiveness.

For companies, the practical response begins at product level. Understanding whether a product can last longer, be repaired more easily, recover components more effectively or incorporate secondary materials can turn circularity from a broad ambition into a concrete risk-management tool. In a more resource-constrained economy, that may prove essential to protecting growth, profitability and resilience.

Source: Noah Wire Services