CDP: Corporates could save a gigaton of emissions by championing renewables in supply chains

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

That is according to new research from CDP. Building on the body’s recent finding that  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, the ‘Changing the Chain’ report analyses data from 7,000 suppliers across the world.

Each of the suppliers analysed provides goods for one or more of the 125 biggest corporates disclosing environmental information through CDP – a cohort which includes the likes of Walmart, L’Oreal and Samsung.

Across all of the suppliers analysed, the average proportion of electricity sourced from renewables annually stands at 11%. CDP found that if this proportion were increased to 31% and energy efficiency measures implemented more rapidly and holistically, one billion metric tonnes of GHG emissions could be mitigated within a year.

In context, one billion tonnes of CO2e is roughly equivalent to the annual emissions of Mexico and Brazil combined.

While CDP notes in its report that many of the world’s biggest companies are making major investments to support renewables uptake in their supply chains, overall progress has been slow, with just 4% of suppliers having set a time-bound numerical target for renewable energy adoption.

The body is warning that this trend must be bucked in order to spur global progress towards the Paris Agreement’s targets and improve suppliers’ climate resilience. Suppliers disclosing to CDP are forecasting $1trn of financial impact from environmental risks, a category which takes in water security and deforestation as well as climate change.

CDP has notably partnered with The Climate Group to help 31 corporates actively engage their suppliers to source more renewable energy. This cohort of businesses includes BT, Lego, AB InBev and Signify.

“Sourcing renewable electricity is one of the swiftest ways to slash emissions and accelerate the global transition to lower carbon grids,” CDP’s global director of supply chains Sonya Bhonsie said.

“Suppliers just starting out should sign their first renewable electricity contract aiming to source at least 20% of their total power, while more intermediate companies should send a powerful market signal by committing to 100% through the RE100 initiative and report progress towards that north star.

“Meanwhile, corporations should be rewarding suppliers taking this action in their procurement processes, making renewable energy a matter of business competitiveness.”

CDP is launching its new research today (9 December) at the UN’s COP25 summit in Madrid, where 4,000 national and business leaders are gathered in a bid to spur more joined-up progress towards the aims of the Paris Agreement.

Earlier this year, the organisation found that more than 110 of the world’s largest companies are now requesting sustainability data from their suppliers, up from just 14 in 2008.

Sarah George

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