World’s most resilient supply chains revealed

That is the conclusion of the latest CDP Supply Chain report in collaboration with Accenture, which surveys how 3,400 international suppliers approach climate and water risks. 

The UK’s 284 respondents rank second in the world after France, garnering praise for energy efficiency commitments, transport optimization and sophisticated water management.

However, while internationally strong, the UK suffers by comparison with itself in 2013, with the percentage of suppliers engaging with value chain partners falling between 2013 and 2014 to 60% (compared with a global average of 50%). Similarly there was a sharp decline in investment in emission reduction initiatives over the last year, from $12.3 billion to $4.6 billion.

The CDP attributed the declines to mixed signals from Government on climate change policy and uneven regulatory support for renewables. In fact more than 90% of suppliers pointed to regulation as the biggest climate risk they faced.

Around the world

The country with the most sustainable suppliers was France, thanks to ‘supportive policy’ and an ‘engaged electorate’. At the other end of the spectrum, a lack of policy guidance in the US means that climate risk may be ‘building up in supply chains’.

CDP also pointed out that there the shale gas boom may have negative environmental consequences in the US, as “there is a risk that cheap natural gas crowds out more sustainable low-carbon energy sources”.

More broadly, a lack of preparation currently leaves supply chains in Brazil, China, India and the United States more vulnerable to climate risks than those in Europe and Japan. However, suppliers in China and India deliver the greatest financial return on investment to reduce their greenhouse gas emissions and demonstrate the strongest appetite for collaboration across the value chain.

“While climate and water risks are apparent, the implications for businesses and economies reliant on complex supply chain models are less understood,” said CDP chief executive officer Paul Simpson. “That multinationals are engaging with thousands of suppliers to better manage environmental challenges and opportunities is encouraging. These companies are catalyzing progress in response to global problems.”

Figure 1: Supply chain sustainability by country

 Download the full report here.

Brad Allen