Apple and Sky among swelling list of green procurement leaders
The number of top companies leading the way on tackling emissions on the supplier chain has doubled in the past year, but many corporates are still missing out on the business opportunities of supplier engagement.
That is according to a new report from CDP and McKinsey, which recognises the likes of Apple, Microsoft, Nestlé, Sky and Unilever for their work with suppliers to reduce emissions and lower environmental risks in the supply chain.
Reductions equivalent to 551 million metric tonnes of CO2 – more than Brazil’s total emissions in 2017 – were reported by suppliers worldwide in 2017. Cost savings of $14bn were reported as a result of these improvements, according to analysis.
With greenhouse gas (GHG) in supply chains on average four times those arising from a company’s direct operations, researchers have stressed the importance of addressing upstream environmental risks.
CDP global director of corporates and supply chains Dexter Galvin said: “Big businesses have for some time understood the importance of managing their Scope 1 and 2 emissions, but Scope 3 emissions, hidden in the value chain – and far greater in volume – are just as vital.
“While it’s encouraging that awareness of climate-related risk is filtering down the supply chain, it’s crucial that engagement and action follows. As our findings show, this not only makes sound business sense, but can result in considerable cost savings for both purchasing organizations and their suppliers.”
Room for improvement
More companies than ever are looking at water security in their supply chains, leading to a 15% rise in suppliers disclosing water data to their customers through CDP in 2017. Meanwhile, corporates such as L'Oréal and McDonald’s are among the first to work with CDP to tackle deforestation in their supply chains.
This heightened leadership is paying dividends, the report highlights. More than three-quarters (76%) of suppliers responding to CDP have identified inherent climate change risks to their business and more than half (52%) report that they have integrated climate change into their corporate strategy.
But analysis shows there is still room for improvement, with less than a quarter (23%) of supplier respondents engaging with their own suppliers to reduce emissions.
Commenting on the news, BT’s head of sustainable business policy Gabrielle Ginér said: “Reducing our supply chain emissions is an essential component of our ambitious science-based target to help keep global temperature rise below 1.5°C. Working with suppliers through CDP’s supply chain programme is crucial to driving this change.”
Suppliers in France are reportedly most likely to have climate change integrated into their business. Meanwhile, corporates across the Atlantic are defying the Trump administration, with the US the highest represented nation on the supplier engagement leader board.
At the other end of the spectrum, a politically and economically instable Brazil has only 6% of supplying companies engaging with their own suppliers on climate change, while only 15% of Chinese respondents are working with their own suppliers on the issue.