Information black hole suppresses supply chain sustainability, says CDP
EXCLUSIVE: A lack of information is hindering companies' attempts to make sustainable decisions in their supply chains, according to the head of Supply Chain at the Carbon Disclosure Project (CDP).
Dexter Galvin says there is still a “tremendous amount of ignorance” among businesses about what their suppliers are doing – a blind spot that leaves many firms open to reputational harm and supply disruptions from uncontrollable risks such as extreme weather events.
As part of CDP’s recent Supply Chain Sustainability Report, 66 multinational corporations – including Ford, Coca-Cola and Microsoft – asked 6,500 of their suppliers to answer a series of questions on climate risks and opportunities. But only 52% of those suppliers actually answered the survey.
Speaking exclusively to edie, Galvin said: “If even the leading companies in the world have trouble getting responses. We know we have a lot to do until we are ready for the step change that we need to prepare us to fight the battle against climate change.”
As a result, CDP is in the process of creating a database with the type of uniform supplier information that buyers need but are forced to ask for every time they choose a new supplier.
“Big companies are currently forced to do their own research to find out what suppliers are doing,” Galvin added. “CDP is looking to standardise this information on big-time commodities like palm oil and distribute this data to buyers to streamline the procurement process.”
Suppliers will also benefit by not having to answer the same questionnaire many times over, giving them more time to implement the sustainability initiatives that buyers plainly want. “Using data to choose the most sustainable suppliers and being clear about that with those suppliers can really drive change very effectively,” said Galvin.
CDP is further streamlining the process by introducing an action-exchange program where they analyse supplier responses and identify opportunities linking them with solutions providers as well as investors to help fund these changes.
And, as Galvin explained, if suppliers aren’t willing to make sustainable choices themselves, their bottom line could be impacted by impending regulations; whether from an international agreement at Paris 2015 or from individual countries.
“The focus on supply chain vulnerability will only increase with the increased regularity of extreme weather events.
“People need to accept that climate change is an extreme threat to their globalised business model.”
Dexter Galvin will be chairing a session at Sustainability Live 2015 in April, where he will discuss how better data can unlock sustainability in supply chains and beyond.
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