Corporate Leaders Making Progress on Climate Emissions, Suppliers Are Next

Leading corporations are making progress on reducing their gigantic carbon footprints. They’ve moved from talking and measuring to actually changing how they operate.

A survey of member companies of the Carbon Disclosure Project and their suppliers, finds that 43% of respondents are achieving year-over-year emissions reductions, but only 28% of suppliers are.

But that should begin changing, given strong new policies that require suppliers to do more. Suppliers can account for as much as 86% of a corporation’s carbon footprint.

A full 90% of corporations now have procurement policies, up from 79% in 2010 and 74% in 2009.

Over the next five years, a growing percentage of companies plan to stop working with suppliers that fail to meet their environmental criteria. In 2009, only 17% of corporations had this policy, but that jumped to 39% in 2011.

63% of companies say they’re training procurement staff in supply chain carbon management, up from 41% in 2010 and 26% in 2009.

Carbon Disclosure Project finds that 39% of responding member companies are realizing monetary savings from their emissions reductions activities and 34.5% are benefiting from new revenue streams or financial savings as a result of their suppliers’ carbon reduction activities.

Extreme weather events disrupted 30% of responding companies’ supply chains in 2011 and 53% of suppliers identify certain or likely exposure to increased operational costs as a direct result of climate change.

"Companies are evolving the way they operate to better capitalize on the opportunities presented by carbon efficient supply
chains," says Frances Way, program director for the Carbon Disclosure Project, "Such a large shift in companies’ procurement models is encouraging but since these trends are only now emerging, we haven’t yet seen a transformational impact on suppliers’ emissions."

More often now, companies are using incentives such as preferential treatment to reward suppliers that have effective emission reduction strategies. 62% of companies say they have an incentives policy, up from just 28% in 2010 and 19% in 2009.

And when they select new suppliers through requests for proposals (RFPs), 50% of companies say they require, or plan to require suppliers to include information on their greenhouse gas emissions management.

As usual, US companies lag those in Europe and Asia. US suppliers received a grade of "D," compared to those in Europe and Asia, which received a "C" for dislosure of carbon emissions.

Despite the fact that effective carbon management creates opportunities to reduce costs, only 24% of companies help suppliers to quantify the return on their low-carbon investments, one of the most important ways to lower emissions across supply
chains. The other focus areas are improving supplier evaluation, more effective communications with suppliers and more stringent procurement criteria.

Members of the Carbon Disclosure Project include: Accenture,
AT&T, Bank of America, British Sky Broadcasting, BT
Group, City of Denver, Coca-Cola Company, Colgate-Palmolive Company, Dell, Ford Motor, Goldman Sachs, IBM, Johnson
& Johnson, Johnson Controls, Kraft Foods, National Grid, Nestle, PepsiCo, Philips Electronics, Starwood Hotels & Resorts, Unilever, and Walmart.

The Carbon Disclosure Project (CDP) is a nonprofit organization that provides a global system for companies and cities to measure, disclose, manage, and share climate change and water information.

Over 3,700 companies across the world’s largest economies now measure and disclose their greenhouse gas emissions and assessment of climate change risk and opportunity through CDP, to set reduction targets and improve performance.

This data is gathered on behalf of 551 institutional investors, holding $71 trillion in assets. CDP holds the largest
collection globally of self-reported climate change data.

Read, A New Era: Supplier Management in the Low-Carbon Economy:

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