Climate change has become a mainstream business issue, and
large global corporations are now extending their gains in internal
carbon management to the next opportunity: their supply
GLOBE-Net, February 15, 2012 - Large
companies such as Walmart and PepsiCo are reaping the benefits of
climate change strategies in multiple ways, according to the most
recent Supply Chain Report by the Carbon Disclosure
Emissions reductions along the supply chain are
translating into clear cost savings and a previous CDP
report found that companies with strong climate change
strategies most often also demonstrate strong financial performance
relative to competitors.
Similar research found that stock prices rose
slightly immediately after companies disclosed their
carbon data. The data from the CDP show that companies taking a
leading and assertive stance on climate change are benefiting
Carbon Disclosure Project (CDP) has been collecting data on
corporate greenhouse-gas (GHG) emissions for almost a
decade. Global companies that have been exposed to these
information requests over the years understand the value of
measuring and reporting their emissions, and they are now pushing
their suppliers to report more climate change-related information
and take greater action to reduce their emissions.
This represents a much larger opportunity: indirect emissions
(meaning those from the supply chain) represent as much as 86% of a
company's total emissions. In 2011, CDP conducted its fourth annual
information request for member companies and their suppliers, and
describes its findings in this report, published in collaboration
The results indicate that companies are
making real changes to their operating models, most frequently in
procurement, resulting in greater reductions in greenhouse-gas
emissions and greater monetary gains across the entire supply
Of the 49 CDP Supply Chain member companies-the companies who
are requesting climate information from their suppliers-90% of
responding companies have a climate change strategy with at least
general guidelines for procurement, an increase from 79% in 2010
and 74% in 2009.
Some 62% reward suppliers that employ good carbon-management
practices (up from 19% in 2009 and 28% in 2010), 39% will soon
begin deselecting suppliers that do not adopt such measures
(compared to 17% in 2009 and 23% in 2010), and 30% factor climate
change into their evaluation of suppliers.
These have all increased significantly over prior years, which
shows growing momentum for supplychain engagement. Monetization of
these efforts remains a significant challenge: only 20% of
responding companies report an estimated monetary value for the
supply chain initiatives they have undertaken to improve carbon
"Those companies that are able to use this information to
create sustainable, profitable growth through climate resilient and
emissions efficient supply chains will be better positioned to
capture market opportunities in the long term, as companies
increasingly make carbon emission reductions not only the price of
market entry, but a point of competitive
differentiation," says Gary Hanifan, global
sustainability lead for supply chain, Accenture,
"As companies examine and modify their supply chains to make
them more flexible and able to withstand the winds of economic
change and the ripple effects of natural disasters, they need to
also consider how their supply chains will stand up under
environmental scrutiny," he adds.
Companies do reveal positive shift
toward new low-carbon business models, Asia and Europe lead on
supplier transparency of climate change strategy
The results also indicate that suppliers are becoming more
transparent about their emissions-related information, in part due
to growing pressure from corporate clients. In 2011, 1,864
suppliers responded to the information request, a substantial
increase from prior years (1,000 in 2010, and 715 in 2009).
This parallels the way that sustainability measures have become
more prevalent in the business community at large.
Over the past decade, major global corporations have
increasingly taken steps to address climate change, partly in
response to greater awareness of climate change among investors and
consumers. Now, suppliers are realizing the business value for
emissions information due to growing requests for such information
among their corporate clients.
The business case is strong and growing: suppliers that do not
measure, quantify, and manage their greenhouse-gas emissions will
soon see their business move to competitors that can provide better
information and clearer evidence of change.
At the same time, while disclosure is strong among global
suppliers-67% of suppliers that responded to the information
request report scope 1 and scope 2 emissions-these companies must
build on this foundation of communication and begin taking
meaningful actions to reduce their emissions.
Finally, the survey results indicate ways in which corporations
can serve as a catalyst for these changes among their suppliers,
working to engender sound carbon-management practices among their
suppliers. While the opportunity is clear, the precise means of
capturing these gains are not.
While 43% of CDP Supply Chain
member companies have achieved reductions in their GHG emissions,
only 28% of their suppliers have.
Some 39% of companies have realized monetary savings from their
own emissions reductions activities and over a third (34.5%) have
benefited from new revenue streams or financial savings as a result
of their suppliers' carbon reduction activities. However, less than
a quarter (24%) help their suppliers to quantify the return on
their low-carbon investments.
The next step is to more effectively evaluate suppliers, improve
performance through more effective procurement, and improve the
tools and metrics used to quantify and monetize the gains from
emissions reductions. Executed correctly, supply-chain engagement
will not simply generate benefits for the environment but for the
balance sheet as well.
The full report is available here.
Supply Chains in the 21st Century: Transparency,
Standards & Responsible Sourcing
More than ever,
organizations are integrating social and environmental
considerations into their purchase decisions in order to address
increasing costs, reduce risk factors, adapt to changing
regulations and new industry standards, and align corporate values
with business practices. At GLOBE 2012, taking
place in Vancouver March 14-16, a
distinguished panel of experts will discuss how organizations
are considering product life cycles across the entire supply chain
in order to plan, design, and implement sustainable procurement
practices and policies that meet or exceed the evolving
expectations for social and environmental performance,
responsibility, and transparency.
Coro Strandberg, Principal,
Strandberg Consulting, Canada (Moderator)
Jim Hartzfeld, Managing Director,
Jan Spencer, Senior Vice President of
Sustainability, Procurement & Continuous Improvement,
Kimberley-Clark Corp., USA
Bob Willard, Sustainability Author
and Speaker, Sustainability Advantage, Canada
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