Supply chain emissions progress stalling under ‘confusing’ policy landscape
Companies are increasingly recognising climate risk in their supply chains, but investment in emissions reductions programmes is going down, according to research out today.
An uncertain regulatory framework appears to be linked to stalling progress on emissions reductions within supply chains. The study from CDP and Accenture has found that, on average, monetary savings from emissions reductions efforts have fallen 44 % in the past 12 months.
Furthermore it points to an ever widening gap between measures taken by large corporates who are members of CDP’s supply chain programme and those by suppliers.
The research – based on information from 2,868 companies including some of the world’s largest corporates – revealed that almost three quarters of respondents identified a current or future risk related to climate change while 56% said that consumers are becoming more receptive to low-carbon products and services.
However, regulatory uncertainty is making companies cautious about investing in emissions reductions and supply chain sustainability – 90% of companies that identified a current or future risk cited regulatory risk as a barrier to investment.
Asked which policy measures would be most supported by business, there was wide backing for the promotion of energy efficiency and clean energy generation, followed by mandatory carbon reporting.
In terms of water risk, more than half cited water scarcity as the greatest water-related concern with suppliers recognising the need to adopt a broader view of supply chain sustainability, with linkages made between water and carbon emissions.
According to CDP’s chief executive officer Paul Simpson, while the findings show a recognition among companies that climate and water risks are on the rise, a mixed regulatory regime is making decisive action difficult.
“Businesses want to leverage their relationships with their suppliers to realise opportunities and minimise climate and water related risks,” he said.
“When governments introduce a more realistic global price on carbon we expect significantly more investment in emissions reductions from corporates.”
Accenture’s global sustainability lead for supply chain, Gary Hanifan, added that the study showed “clear evidence” that those who are most transparent about their climate change risks are more likely to achieve the greatest emissions reductions.
“They are also more likely to enjoy monetary savings as a result of their responses to climate change risks. But the return on investment by the most proactive companies will not reach its full potential unless those companies can encourage their suppliers to follow their lead,” he cautioned.
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