Companies are now requiring their suppliers to address carbon management as a core business issue. A plan to deselect some suppliers in the future for failing to meet carbon management criteria set by the companies. These organizations are increasinigly developing strategies for engaging with suppliers on carbon related issues amd have emissions or energy reduction plans in place.
Tracey de Morsella, Green Economy Post
According to the second annual CDP Supply Chain Report summarizing the climate change information from 710 suppliers, there is a growing trend among global organizations of requiring that suppliers disclose their green house gas data and to demonstrate GHG management and to take action in order to maintain their business relationships.
Participating companies include:Acer, BAE Systems, Bank of America, Baxter International, Cadbury, Carrefour, Colgate-Palmolive Company, ConAgra Foods, Dell, EMC Corporation, ENEL, FIJI Water, GlaxoSmithKline, Google, H.J. Heinz Company, HP, IBM, Imperial Tobacco Group, Johnson & Johnson, Johnson Controls, Juniper Networks, Kao, L’Oréal, Logica, National Australia Group, Europe, National Grid, Newmont Mining Corporation, PepsiCo, Procter & Gamble Company, Reckitt Benckiser, Royal Mail Group, Sony Corporation, Unilever, Vivendi, Vodafone Group.
The majority of CDP Supply Chain members (56%) have stated they actually expect to deselect some suppliers in the future for failing to meet carbon management criteria set by the companies. This is an increase from just 6% of members who would deselect suppliers today for failure to manage carbon. Some also indicate that they intend to develop contracts which require improved carbon management.
”It is clear that some companies are now requiring their suppliers to address carbon management as a core business issue. This is no longer a ‘nice to have’ for the leaders, it is becoming a ‘need to have’ and we expect to see this trend growing across the whole business sector,“ said Paul Dickinson, CEO, CDP.
89% of CDP Supply Chain members have an established strategy to engage with suppliers on carbon related issues. 91% of members have a board level executive responsible for climate change, compared to 80% within the Global 500 constituents. 90% have an emissions or energy reduction plan in place, compared to 51% in the Global 500.**
The report shows that the importance granted by CDP Supply Chain members to managing carbon targets versus classic procurement targets is expected to triple in the next five years.
“We see carbon management as an increasingly important part of supplier engagement. It makes good business sense for us to work with suppliers who understand how climate change is impacting their business and manage these issues properly,” said Brad Minnis, director of Environmental, Health, Safety and Security at Juniper Networks.
However, the report shows that despite the fact that a significant proportion of carbon emissions are typically found in the supply chain, it is still a challenging area for member companies to measure and just 20% report figures for supply chain emissions.
A.T. Kearney partner and study co-leader Daniel Mahler said, “Major corporations are taking carbon reduction seriously and are developing strategies to address carbon emissions in their supply chains. Corporate CEOs and boards of directors are demanding results from company carbon reduction programs not only for the environmental benefits, but for cost-reduction benefits as well. The challenge moving forward is for additional corporations and suppliers to operationalize their carbon-reduction strategies.”
In 2009, of the 710 suppliers disclosing to their customers through the CDP Supply Chain program, 48% were reporting for the first time. The majority (60%) have appointed a board member responsible for climate change and while 56% have a reduction plan, 38% have committed to clear targets; which tend to be short term (majority under two years). Companies are also reporting considerable cost benefits of carbon reduction programs – HP and Allianz report significant commercial benefits in addressing climate change related issues.
Download a full copy of the CDP Supply Chain Report 2010
© 2010, Tracey de Morsella. All rights reserved. Do not republish.