Mars and PepsiCo launch new supply chain climate programme

The loan will support projects to help deliver net-zero emissions

The three firms are the first corporate members of the Supplier Leadership on Climate Transition (Supplier LoCT), a new collaborative effort to provide suppliers with resources, tools and the knowledge to develop ambitious carbon reduction strategies.

Through Supplier LoCT, which has been set up in partnership with consultancy Guidehouse, end-user corporates will help suppliers understand how greenhouse gas emissions can be measured and reduced in their own businesses by setting science-based targets and joining business commitments such as the RE100.

Last year, PepsiCo joined the Climate Group’s RE100 initiative, pledging to source 100% renewable electricity across its operations by 2030, a move that could reduce the manufacturing giant’s carbon footprint by 2.5 million tonnes. Lessons from progressing against this target can be shared with suppliers.

Mars is currently engaging its largest 200 suppliers to decarbonise. To date, 23 of these major suppliers have set science-based targets or joined the RE100 and Mars is now working with another 30 firms to enrol in the new supplier programme.

Mars’ chief procurement and sustainability officer Barry Parkin said: “As the world looks to rebuild from the pandemic, this will be a critical year in altering the trajectory of climate change. It’s never been more vital for global businesses and their suppliers to come together and protect the health of our planet and global communities for generations to come.

“Mars is making strong progress to cut emissions in our direct operations and will hit our 2025 target well ahead of our goal. However, with our extended supply chain accounting for over 94% of our emissions, it’s crucial we also partner with our suppliers to drive broad transformations and mitigate our collective impact on climate change. By forming this partnership and actively engaging our suppliers on sustainability, we hope we can drive truly meaningful, global impact.”

Mars believes that by engaging its suppliers on climate action, it can push towards a commitment of reducing value chain emissions by 27% by 2025 and 67% by 2050.

Within the next three years, Mars will have reduced emissions from its direct operations by 42% compared to 2050, building towards a wider target of reaching net-zero emissions for its direct operations by 2040.

Supplier resiliency

More businesses are turning to the supply chain to assist with climate action.

CDP research shows that, on average, supply chain emissions are up to 11.4 times higher than operational emissions. Therefore, many businesses that have set net-zero or science-based targets are also aiming to reduce supply chain emissions. Engagement with suppliers has seen those analysed by CDP reduce aggregate emissions by 619 million tonnes, which has saved them $33.7bn in the process.

With corporate buyers set to be impacted by this looming cost increase, many larger businesses are demanding action. More than 150 businesses worth more than $4.3trn in purchasing spend, such as Google, L’Oréal, Walmart, Braskem and Toyota, are working with CDP to request that suppliers disclose environmental data.

CDP’s Transparency to Transformation: A Chain Reaction report analysed data from more than 8,000 suppliers that are disclosing to end-user corporates via the CDP platform. The latest research warns that a combined $120bn of increased costs could come from supply chains by 2026, due to environmental risks.

Matt Mace