Almost half of the supply chain partners of 75 major multi-nationals have failed to meet requests for information on their carbon emissions and climate risk strategies – that’s a total of some 4,000 companies.
The figures come from a report by CDP & BSR highlighting the difficulties companies are facing in establishing the extent to which impending climate regulation will affect their business.
The 75 companies in question are members of the CDP (formerly known as the Carbon Disclosure Project) and include organisations like Dell, Unilever and Walmart. They have a procurement spend of some $2 trillion.
CDP reckons that supply chains are responsible for up to four times the greenhouse gas emissions of a company’s direct emissions.
Analysis of the suppliers that have provided information demonstrates the scale of risk now facing companies: close to three quarters (72 per cent) said that climate change presents risks that could significantly impact their business operations, revenue or expenditure. The majority (64 per cent) of suppliers identified climate regulation as a risk, with the most commonly cited consequences being fuel, energy and carbon taxes.
But despite the recognition of climate related risk, less than half (45 per cent) the participating suppliers have set a target to reduce their emissions and just one third (34 per cent) have lowered their GHGs in the past reporting year.
This report comes just a few weeks after the Paris COP21 agreement on climate change which governments agreed to establish regulatory mechanisms to ratchet down emissions and stay well below a 2°C increase in mean temperatures.
If that is to be achieved, it is all too apparent that there is a huge amount of work to be done in in terms of improving visibility of supply chain emissions, and collaboration to manage emissions more effectively.
Next year, CDP plans to launch a ranking of how global corporations are managing climate change in their organisations. It said: “It is no longer acceptable for large corporations to avoid the wider climate impacts of their supply chains. CDP will aim to highlight the efforts of those that are managing this issue effectively and shine a light on those corporations that are not engaging with their suppliers on the issue.”
It has yet to work out the methodology for this initiative, but it has the potential to name and shame those organisations that are not tackling the climate change challenge.
And that adds reputational risk to the challenge – are you in danger of being named and shamed?
Download the full report here:
https://www.cdp.net/en-US/Pages/events/2016/supply-chain/Global-Supply-Chain-Report-2016.aspx
