Businesses in the dark about climate risks in half their supply chains
Almost half of the key suppliers for global companies like Dell, Unilever and Walmart fail to respond to requests for climate information, new research from CDP has revealed.
As part of CDP’s supply chain disclosure programme, 75 corporations – accounting for a total procurement spend of $2trn – asked for climate-related information from almost 8,000 suppliers. Only half of those suppliers responded, while only half of those respondents demonstrated any measure of climate risk management.
Only a third of participants reported decreasing Scope 1 and 2 emissions for the reporting year, while even fewer manged their water risks.
However CDP said the report also offered indicators that improvement was on the way.
“The data suggests that carbon emissions and climate management are increasingly factored into procurement decisions and are disrupting established supplier-based business models,” said CDP in a statement.
L’Oréal, for example, works with CDP to create supplier climate scorecards that can be easily understood in the purchasing department. The Coca-Cola Company and LEGO Group are both experimenting with incentives and training for suppliers that will improve climate performance and generate shared value.
To continue this progress, CDP called for purchasers and suppliers to employ several levers to help improve performance. It said purchasers can provide financial incentives for buyers and set supplier engagement targets, while suppliers integrate of climate issues into business strategy and establish of emissions reduction targets.
“The critical point is that change can happen,” said the report.
“Purchasers can motivate suppliers to understand and address their climate risks, and suppliers can take steps to engage their customers on climate issues and reduce their emissions and risks. However, many companies, purchasers, and suppliers are behind where they need to be. On the heels of the Paris Agreement, now is the time to get started.”
Global chocolate firm Mondolez is one example of a leader in this space, having recently created its own bespoke supply chain verification system in a bid to improve the social, trade and environmental standards of the cocoa industry.
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