The world’s largest corporate buyers are ramping up efforts to reduce emissions across their supply chains, according to the latest research from global disclosure organisation CDP.
In a new report released today (24 January), CDP reveals that global supply chain emissions fell by 434 million tonnes last year – more than France’s total greenhouse gas (GHG) emissions in 2014.
The emissions reduction, which led to £10bn in cost savings, was driven by the world’s seeking to exploit the opportunities presented by the low-carbon transition, CDP says.
The report was commissioned by 89 companies with a combined purchasing power of £2.2trn, including the likes of Sony, Microsoft and Walmart. With disclosures from more than 3,300 companies, 68% of them recognised the value of taking positive action on climate change, while three-quarters reported significant climate risks.
However, the climate awareness of these major companies is not being translated further down the supply chain, according to CDP. The analysis, developed in partnership with BSR and the Carbon Trust, shows that only 22% of responding companies currently engage with their on suppliers on carbon emissions and 16% engage on water use. Less than half of suppliers have set climate targets and just a third reported a decrease in emissions last year.
Carbon Trust chief executive Tom Delay said: “Supply chain is the next frontier in sustainability. Managing the environmental impact of your own operations is expected behaviour. But the greatest opportunities for reductions are typically outside of direct operational control, in the supply chain. While some are showing what can be done today, the majority do not yet have a clear understanding of how to measure their impact or find the value in working with suppliers.
“Large public and private sector organizations can deliver change at the scale and speed required to address the challenges of climate change and resource scarcity. We hope that our insight and the examples from the leaders engaged with CDP help to accelerate the shift to a more sustainable, low carbon economy.”
Supply chains are a “critical focus” for global corporations to reduce their carbon impact in the light of the Paris Agreement which requires GHG emissions to fall to net-zero before the end of the century, CDP says. The organisation recently issued businesses a “wake-up call” after research revealed that water risks fuelled by climate change cost the private sector $14bn (£11.3bn) over the last year.
This latest report awarded 29 businesses a position on CPD’s first ever supplier engagement leader board. Brands such as BT Group, Philips Lighting and Hewlett-Packard (HP) are all recognised on the leader board for their work with suppliers to reduce emissions and lower climate-related risks in the supply chain.
CDP head of supply chain Dexter Galvin said: “We congratulate the 29 leading companies that are using their buying clout to drive change across their supply chains. Companies have a critical role to play in delivering on the Paris Agreement, and as well as setting their own house in order, it is essential they turn their attention to the risks and opportunities outsourced to their supply chain.”
“By harnessing their purchasing power, big buyers have the potential to deliver the large-scale, rapid change that is needed and lead the way towards our sustainable future.”
Commenting on her firm’s achievement, Philips Lighting’s head of sustainability Nicola Kimm said: “We are delighted to be recognised as global leaders for our work driving down emissions and improving efficiency in our supply chain. Lower emissions in the supply chain isn’t just about helping the environment, it’s a business imperative which boosts our competitive advantage and builds our resilience for a low carbon future.”
Sustainable supply chains
This report serves as further evidence that the business community is increasingly realising the benefits of assessing indirect carbon emissions in the supply chain which, according to CDP, include efficiency gains, savings to the bottom line and ultimately increased revenue.
Heathrow Airport recently became the first in its sector – and only the fifth organisation in the world – to receive the world’s first certification standard for the reduction of greenhouse gas (GHG) emissions in its supply chain. Meanwhile, BT’s new online sustainability assessment tool aims to help its suppliers understand how to reduce their carbon impact.
Mars Incorporated’s global sustainability director Kate Wylie recently told edie that innovation across every level of business is vital to enhance sustainable supply chain management.