6% of leading companies already deselect suppliers who fail to manage carbon, 56% committed to do so in the future
Thursday, February 11, 2010
Suppliers are now expected by some of their global customers to demonstrate greenhouse gas emissions management, awareness and action, in order to maintain business relationships, according to Supply Chain Report 2010 recently released by the Carbon Disclosure Project (CDP).
Nearly 90% of the 44 CDP Supply Chain member companies (see below) have an established strategy to engage with suppliers on carbon related issues and 91% of members have a board level executive responsible for climate change, compared to 80% within the Global 500 constituents.** In addition, 90% have an emissions or energy reduction plan in place, compared to 51% in the Global 500.**
The majority of CDP Supply Chain members (56%) have also 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. These companies are choosing to take these steps ahead of regulation, because they make good business sense.
“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.
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.
”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.
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.
“Major corporations are taking carbon reduction seriously and are developing strategies to address carbon emissions in their supply chains," said Daniel Mahler, A.T. Kearney. "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.”
To assemble the report, CDP Supply Chain member companies reached out to 1,402 of their suppliers. About 51 percent of suppliers responded to the survey, 7 percent declined to participate and another 42 percent did not respond.
Download a full copy of the CDP Supply Chain Report 2010.
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.
*Suppliers are asked to report on greenhouse gas emissions and reduction targets; governance and assessment of risks and opportunities associated with climate change.
**82% of the world’s largest 500 companies also report through CDP.
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