Low Carbon Economy
Supply Chain

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

Burgess COMMENTARY

Peter Burgess

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

In 2011, CDP conducted its fourth annual information request for member companies and their suppliers, and describes its findings in this report, published in collaboration with Accenture. By Carbon Disclosure Project & Accenture

Climate change has become a mainstream business issue, and large global corporations are now extending their gains in internal carbon management to the next opportunity: their supply chain. Carbon Disclosure Project (CDP) has been collecting data on corporate greenhouse-gas (GHG) emissions for almost a decade.

Global companies that have been exposed to these information requests for many years understand the value of measuring and reporting their emissions, and they are now pushing their suppliers to report more climate change-related information and take greater action to reduce their emissions.

This represents a much larger opportunity: indirect emissions (meaning those from the supply chain) represent as much as 86% of a company’s total emissions.

In 2011, CDP conducted its fourth annual information request for member companies and their suppliers, and describes its findings in this report, published in collaboration with Accenture.

The results indicate that companies are making real changes to their operating models, most frequently in procurement, resulting in greater reductions in greenhouse-gas emissions and greater monetary gains across the entire supply chain.

Of the 49 CDP Supply Chain member companies—the companies who are requesting climate information from their suppliers—90% of responding companies have a climate change strategy with at least general guidelines for procurement, an increase from 79% in 2010 and 74% in 2009.

Some 62% reward suppliers that employ good carbon-management practices (up from 19% in 2009 and 28% in 2010), 39% will soon begin deselecting suppliers that do not adopt such measures (compared to 17% in 2009 and 23% in 2010), and 30% factor climate change into their evaluation of suppliers.

These have all increased significantly over prior years, which shows growing momentum for supplychain engagement. Monetization of these efforts remains a significant challenge: only 20% of responding companies report an estimated monetary value for the supply chain initiatives they have undertaken to improve carbon management.