CDP: Corporate demand for supplier transparency increased eight-fold since 2008

CDP estimates that the average company's supply chain emissions are 5.5 times that of its direct operations. Stock image of factory in China

Released today, the non-profit’s ‘cascading commitments’ report reveals that more than 5,500 large suppliers disclosed information regarding their carbon, water and waste footprints to key corporate clients in 2018.

During 2018, these suppliers were supported by corporates from across the retail, technology, finance, consumer goods, automotive and food and drink industries to collectively generate 633 million tonnes of CO2 emission reductions, according to CDP.

This decarbonisation, combined with more efficient resource, energy and water use, helped the supplier group to collectively save more than $19.3bn (£14.9bn) in costs. Progress towards water stewardship in supply chains has been particularly rapid, the report notes.

To produce the report, CDP surveyed the 115 companies to have requested increased amounts of sustainability-related information from suppliers last year to garner the key factors driving their purchasing decisions. Of a subset of 27 of these firms, 73% said they were either de-selecting or set to de-select suppliers based on environmental performance. In 2008, this proportion stood at just 4%.

“In the ten years that we have been working with purchasing organisations, we have seen a fundamental shift in expectations around business action on sustainability,” CDP’s global head of supply chains Sonya Bhonsie said.

“Leading purchasers are using disclosure to push positive change down the supply chain, with data playing an increasingly important role in their decision-making. If suppliers continue to cascade good practices further down the supply chain, this has the potential to play a huge role in the rapid transition to a sustainable, low-carbon economy.”

Despite the corporate push for disclosure, Bhonsie warned that many suppliers are still failing to take ambitious actions due to a lack of numeric, time-bound targets. Of the 5,500 suppliers to have disclosed sustainability data to corporates in 2018, 43% did not report any emissions reductions, she highlighted.

CDP is, therefore, calling on corporates to set more specific targets for their suppliers, in order to drive more impactful change and meet ever-growing consumer and investor demands for sustainable procurement practices.

A new era for leadership

The report comes at a time when the average company’s supply chain emissions are estimated to be around five-and-a-half times greater than those generated by their direct operations.

While tracking wider disclosure trends, the document additionally names the 120 firms which CDP regards as ‘Supplier Engagement Leaders’ in their respective sectors. These leaders – which include Walmart, Unilever and Kellogg Company, as well as British communications giants Sky and BT – are recognised for their work with suppliers to reduce emissions and lower environmental risks in the supply chain.

Printing giant HP, technology firm Intel and chemical company Braskem are praised in the report for having asked their suppliers for greater disclosure on their water stewardship practices during 2018. CDP claims that 43 major corporates have now made such a move, recording an 11% year-on-year increase in supplier responses.

As for deforestation, CDP states that 305 suppliers made disclosures to 14 of the world’s largest companies, including the likes of McDonald’s and L’Oreal, in 2018. This marked a 247% increase in disclosure, compared with CDP’s 2017 statistics. However, just 17% of these suppliers report having set specific, anti-deforestation commitments.

The Carbon Trust’s managing director for advisory practices Hugh Jones, who co-wrote the CDP report, said these trends have set the foundations for procurement teams to make sustainability a “decisive factor” in evaluating suppliers.

“Procurement teams must understand their most significant impacts, ask the right questions and actively provide support to help their supply chain to take action,” Jones said.

“The good news is that there’s so much shared value to be found in greening the supply chain. This can help to increase efficiency, reduce resource costs, enter new markets and make supply chains more resilient to the impacts of a changing climate and a changing world.”

Sarah George

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