CDP gives eight reasons why companies should improve the climate credentials of their supply chains
- Supply chains account for the bulk of corporate emissions
If a company is aspiring to cut the carbon impact of its products, looking only within its own four walls won’t cut it. The CDP research reveals most supply chain emissions are around four times the operational emissions for most companies.
- Engagement takes time, and is trickier than you think
Many suppliers are still turning a blind eye to the climate debate – leaving many big firms in the dark as to the true impact of their business. Of the almost 8,000 key suppliers contacted through CDP’s study on behalf of the multinationals, only 51 per cent even gave a response.
- Major internationals are spearheading supply chain reform
While the high carbon impact of supply chains presents significant risk, it also presents a huge opportunity. Many big corporations are already beginning to take their supply chain impacts more seriously, and companies who don’t could risk being left behind. CDP has 75 major multinationals – including Coca-Cola, Goldman Sachs and Wal-Mart – signed up to its programme and collecting data from their suppliers every year.
- Regulation is lurking around the corner
Following the Paris Agreement many countries are already beginning to take swift action on emissions. There’s a huge amount of risk out there in the world at the moment on climate. Waiting for regulation can cause a lot of problems, not least cost increases in the supply chain, while companies that have been managing this issue in their own operations for a number of years will naturally be more prepared for regulation.
- Don’t forget water
While emissions reductions and energy often steal the limelight as far the climate goes, the CDP report also highlights the risk to companies of ignoring the issue of water shortages. It’s a very scarce commodity.
- Supply chain reform has measurable effects…
While the CDP reported disappointing returns for the number of suppliers who responded to request for climate information, where suppliers did report back there were often significant improvements. Between the first and third year of being in the programme, suppliers become far more likely to report on their emissions, much better at identifying risk to their organisation, and even twice as likely to have a reduction target in place.
- And saves cash
CDP found that those suppliers that did disclose their climate information reported combined savings of $6.6bn. The savings also increase with time – those suppliers who have been reporting the information for at least three years reported average savings of $1.5m per emissions reductions initiative.
- Supply chain engagement is going public
CDP is concerned that too few companies are engaging their supply chains on climate – so this year it will begin scoring companies on the management of carbon and climate change across their supply chains, with rankings to be released in a years’ time.