Companies not yet making significant emission cuts across supply chains

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Multi-national companies are not yet demonstrating significant emissions reductions in their supply chains, according to research published today by the Carbon Disclosure Project (CDP) and Accenture.

The report on 49 CDP member companies, including L’Oréal, Philips and Walmart, and more than 1,800 of their suppliers showed that while 43 per cent of responding companies had achieved year-on-year emissions reductions, only 28 per cent of suppliers had done so.

It said that 39 per cent of responding companies had realised monetary savings from their own emissions reductions activities and over a third (34.5 per cent) had benefited from new revenue streams or financial savings as a result of their suppliers’ carbon reduction activities.

Extreme weather events disrupted 30 per cent of responding companies’ supply chains in the past year alone and more than half (53 per cent) of the suppliers identified certain or likely exposure to increased operational costs as a direct result of climate change, compounding the need for greater action to reduce emissions that occur beyond direct operations. These can account for as much as 86 per cent of a company’s carbon footprint.

The report showed a rise in the proportion of responding companies with climate change strategies that incorporate procurement guidelines (90 per cent, up from 74 per cent in 2009 and 79 per cent in 2010).

The proportion of responding companies that claim they will deselect suppliers who fail to meet formal environmental criteria within five years has more than doubled from 17 per cent in 2009 to 39 per cent in 2011.

Frances Way, programme director for CDP, said: “Such a large shift in companies’ procurement models is encouraging but since these trends are only now emerging, we are yet to see a transformational impact on suppliers’ emissions.”

This is the first year that CDP has scored suppliers on their carbon performance as well as disclosure. The scores, awarded by FirstCarbon Solutions, reflect the transparency of suppliers’ climate change strategies and their action to reduce carbon emissions. The results suggest that North American suppliers are likely to be superseded in capitalising on the opportunities of climate change. Asian and European suppliers received an average score of 52 and 53 for disclosure but North American suppliers scored just 45 of a possible 100. The pattern is reflected in performance scores where, on average, North American suppliers were placed in the D band while Asian and European suppliers achieved C bands.

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