Multinationals need to reduce emissions from supply chain, says report

Multinationals need to turn their attention from their own carbon performance to that of their supply chain, according to a report from the Carbon Disclosure Project (CDP) and Accenture.

The research, which looked at 49 members including L’Oréal, Philips and Walmart and 1800 of their suppliers, found that while 43% of companies have cut their emissions year-on-year only 28% of suppliers have done likewise.

CDP’s fourth annual global study, A new era: supplier management in the low-carbon economy, concludes that there is a gulf between companies and their suppliers.

But there are signs of change. Leading businesses are changing their operating models to include procurement guidelines in climate change strategies and carbon management in procurement policies.

More companies (39% up from 17%) are now prepared to stop working with suppliers that fail to meet formal environmental criteria.

Conversely, more companies are also now using incentives like positive external communications to reward suppliers for good carbon management.

Half of companies are even developing or have developed contractual obligations for suppliers to include information on their greenhouse gas emissions management.

“Companies are evolving the way they operate to better capitalize on the opportunities presented by carbon efficient supply chains,” says CDP programme director Frances Way.

The trends in procurement models are encouraging, goes on Way, but as they are only starting to emerge, the impact on suppliers’ emissions is not obvious yet.

“As companies examine and modify their supply chains to make them more flexible and able to withstand the winds of economic change and the ripple effects of natural disasters, they need to also consider how their supply chains will stand up under environmental scrutiny,” adds Gary Hanifan of Accenture.

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Related stories:
UK business ‘green’ spending set to reach £6.8 billion by 2015, says Verdantix (2-Feb)
Business unaware of incentives for energy saving, says report (14-Oct 2011)
Half of multinationals looking for low-carbon suppliers, finds report (27-Sept 2011)

03 February 2012