Some of the world’s biggest businesses and public sector organisations are using their influence to drive sustainability improvements throughout their supply chains.
The CDP Supply Chain Report, written by the Carbon Trust and BSR, reveals that suppliers disclosed emissions reductions equivalent to 434 million tonnes of carbon dioxide in 2016 – greater than France’s total greenhouse gas emissions in 2014. The reductions resulted in associated cost savings of US$12.4 billion.
Indirect emissions from supply chains are typically four times greater than an organisation’s direct operational emissions, representing a huge area of opportunity for improvement. However, the report says that although leaders are finding ways to take action in the supply chain, the commitments are typically not cascading beyond the first tier. Only 22% of responding companies are currently engaging with their own suppliers on carbon emissions, with just 16% engaging suppliers on water use.
Water lags behind climate change awareness
When looking at water it appears that awareness of opportunities and risks, as well as levels of action, lag some way behind climate change. For example, while more than two-thirds of supplier respondents to the supply chain program saw climate change opportunities, only 36% of suppliers responding to CDP’s water program identified water-related opportunities. Only 28% see any water risks to their business, which compares to three-quarters that see climate change risks.
The commitments made by large organizations on water are also not cascading through the supply chain, according to the report. Of the 607 respondents to CDP’s Investorled water program in 2016, only 38% required their key suppliers to report on water use, risks and management. When members cascaded the CDP request to their suppliers, only 16% of 1,260 responding businesses disclosed that they in turn ask their own suppliers to report on water use.
Common barriers include perceived lack of leverage over business partners
Common barriers to engagement include companies’ lack of experience in calculating and managing their own emissions, a perceived lack of leverage over business partners, costs associated with managing an engagement programme and an absence of mandatory requirements from customers or regulation.
Where companies are proactively engaging with their suppliers, they face a serious lack of transparency, with nearly half (47%) of suppliers not responding to their customers’ requests for climate and water-related disclosure.
The report, Missing link: Harnessing the power of purchasing for a sustainable future,was written on behalf of CDP’s 89 supply chain members - including PepsiCo, Microsoft, BMW and Wal-Mart - collectively representing US$2.7 trillion of procurement spend. The insights are based on data from 4,366 suppliers, as well as the strategies and actions taken by the members themselves.
The report incorporates the Carbon Trust’s four-part framework approach for developing an effective supply chain engagement programme. It also contains details of the types of interventions that can be effective in delivering change within the supply chain, illustrated by practical examples where they have been successfully implemented.
Tom Delay, Chief Executive, The Carbon Trust commented:
“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.”
Click here to download Missing link: Harnessing the power of purchasing for a sustainable future