Carbon management as a supply chain strategy
22 March 2010
A.T. Kearney report on Carbon Disclosure Project notes that most global companies are preparing to de-select suppliers who fail to manage carbon.
Suppliers are increasingly expected by some of their global customers to demonstrate greenhouse gas emissions management, awareness and action, in order to maintain business relationships, a Carbon Disclosure Project (CDP) report produced by A.T. Kearney shows.
Based on information gathered from 710 suppliers, more companies are requesting that suppliers disclose data via the Carbon Disclosure Project (CDP) Supply Chain program. Of these 710 suppliers disclosing to their customers through the CDP Supply Chain program, 48% were reporting for the first time. The majority (60%) have appointed a board member responsible for climate change and while 56% have a reduction plan, 38% have committed to clear targets; which tend to be short term (less than two years).
The majority of CDP Supply Chain members (56%) have also stated they actually expect to de-select some suppliers in the future for failing to meet carbon management criteria set by the companies. This is an increase from just 6% of members who would de-select suppliers today for failure to manage carbon. Some also indicate that they intend to develop contracts which require improved carbon management.
"We see carbon management as an increasingly important part of supplier engagement. It makes good business sense for us to work with suppliers who understand how climate change is impacting their business and manage these issues properly," said Brad Minnis, director of Environmental, Health, Safety and Security at Juniper Networks.
The report shows that the importance granted by CDP Supply Chain members to managing carbon targets versus classic procurement targets is expected to triple in the next five years. However, the report also shows that, despite the fact that a significant proportion of carbon emissions are typically found in the supply chain, it is still a challenging area for member companies to measure and just 20% report figures for supply chain emissions.
A.T. Kearney partner and study co-leader Daniel Mahler said, "Major corporations are taking carbon reduction seriously and are developing strategies to address carbon emissions in their supply chains. Corporate CEOs and boards of directors are demanding results from company carbon reduction programs not only for the environmental benefits, but for cost-reduction benefits as well. The challenge moving forward is for additional corporations and suppliers to operationalise their carbon-reduction strategies."
A full copy of the CDP Supply Chain Report 2010 is available at www.cdproject.net
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