Due to its impact on climate change, a growing number of companies are requiring transparency in their supply chain’s carbon emissions. According to the McKinsey Quarterly report from 2008, 40-60% of a company’s carbon footprint resides within the supply chain. The CDP’s 2011 Supply Chain Report noted that more than 50% of an average corporation’s carbon emissions are outside its four walls. Identifying, tracking and managing supply chain emissions is therefore critical to addressing climate change effectively.

As the green debate becomes even more sophisticated, the media, consumers, shareholders and politicians are increasingly putting pressure on organisations to actively seek and make performance improvements to reduce their carbon footprint. As a result, businesses today are not only looking to reduce their own carbon footprint, they are examining the green credentials of their existing and potential suppliers. And, at this point, we see the value being placed on mandatory and consistent reporting of carbon emissions as something that will only increase.

In fact, October, 2011 research from the Carbon Trust showed that half of firms surveyed confirmed they would choose to use a specific supplier, based on its carbon footprint. Of those not currently evaluating their supply chain, more than 40 percent said they would prioritise it next year. Nearly 75% of those surveyed fully expect increased shareholder pressure to reduce carbon emissions in the months and years to come.

It seems fair to say, then, that a standard and consistent scoring system is the only way to provide the transparency required for effective carbon management along the entire supply chain.

An example of this is the voluntary Carbon Disclosure Project (CDP) Supply Chain programme, which offers a practical scoring system enabling industry benchmarking and removing existing complexities related to supplier carbon data collection. The CDP scoring project, established in 2008, is designed to give organisations an opportunity to explain their sustainability performance to supply chain members across a broad range of areas, such as strategy, governance and greenhouse gas (GHG) emissions management.

More than 50 brands, including Vodafone, PepsiCo and Walmart, participate in CDP Supply Chain today. For CDP Supply Chain members, the benefits of supplier scoring include a comparable metric for them to analyse and prioritise risk in their supply chain. In addition, it provides the ability to highlight areas for improvement and share best practices among suppliers and customers. According to the CDP’s 2011 Supply Chain Report, the emissions of about 2,500 of the largest global corporations account for roughly 20-25% of the world’s GHG emissions.

This growing membership is testimony to the fact that one can’t manage what one doesn’t measure. Imagine, therefore, the potential to account for, report on and work to decrease those emissions over time?

Partnering with the CDP for its Supply Chain programme, FirstCarbon Solutions is tasked with filtering through data to score nearly 1,300 suppliers of participating brands within the CDP. The goal of the project is to provide tangible insights, so participating brands can accurately assess which suppliers are performing well on carbon reduction, and which have work to do.

Carbon reporting across the supply chain is becoming more common – and in some cases expected – and the time has come for organisations to prepare themselves with the right systems and processes to meet this new requirement.

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