Supply chain emissions moves up the corporate agenda
The number of companies adopting an industry-leading approach to supply chain emissions has doubled in a year, according to CDP, the environmental disclosure platform.
CDP has awarded 58 companies out of more than 3,300 a place on its second annual Supplier Engagement leader board, double the 29 identified in 2017. Analysis is provided by McKinsey & Company.
Companies are recognised for their work with suppliers to reduce emissions and lower environmental risks in the supply chain. Leaders this year include: Bank of America, BT Group, Nestlé, Panasonic, Rolls Royce, Société Générale, Tokyo Gas Co. and Unilever.
The study found that more companies than ever before are looking at water security in their supply chains – leading to a 15 per cent rise in suppliers disclosing water data to their customers through CDP in 2017 – and organisations including Klabin, L’Oréal and McDonald’s are among the first to work with CDP to tackle deforestation in their supply chains.
Closing the Gap: Scaling up sustainable supply chain practices, CDP’s Global Supply Chain Report 2018, is based on climate, water and deforestation-related data collected from 4,872 supplying companies across global supply chains at the request of 99 of the world’s largest purchasing organisation. Wielding a combined purchasing power in excess of US$3 trillion, these organisation include Accenture, BT Group, Cisco, KMPG UK and Philips Lighting.
One third of organisations on the Supplier Engagement leader board are US, making it the best-represented nation, ahead of the UK at 15 per cent.
Supplying companies in France are the most likely to have climate change integrated into their business (80 per cent), while 74 per cent report board-level responsibility for climate change.
Brazil has the lowest level of target setting (just 21 per cent of respondents have set emissions reduction targets and a mere 8 per cent have set renewable energy targets) and only 6 per cent of supplying companies are engaging with their own suppliers on climate change.
China has above-average disclosure rates for Scope 1 and 2 emissions – awareness of which will likely be bolstered by the recently announced national emissions trading system. But only 15 per cent of Chinese respondents are engaging with their own suppliers on the issue.
Gabrielle Ginér, head of sustainable business policy at BT Group said: “We’re proud to be recognised on CDP’s Supplier Engagement leader board for our efforts to engage suppliers on climate change. Reducing our supply chain emissions is an essential component of our ambitious science-based target to help keep global temperature rise below 1.5°C. Working with suppliers through CDP’s supply chain program is crucial to driving this change.”
Patricia Espinosa, executive secretary, United Nations Framework Convention on Climate Change, who has written the foreword in the report, said: “Delivering on the ambitions of the Paris Agreement will require businesses to play a key role to reduce emissions, manage water resources and limit deforestation within their operations and their supply chains.”
Dexter Galvin, global director of corporates and supply chains at CDP, said: “Big businesses have for some time understood the importance of managing their Scope 1 and 2 emissions, but Scope 3 emissions, hidden in the value chain – and far greater in volume – are just as vital. While it’s encouraging that awareness of climate-related risk is filtering down the supply chain, it’s crucial that engagement and action follows. As our findings show, this not only makes sound business sense, but can result in considerable cost savings for both purchasing organisation and their suppliers.”