CSCMP's Supply Chain Quarterly
October 21, 2018
Forward Thinking

More companies press suppliers on carbon reductions

A new report shows that more companies are considering suppliers' efforts to reduce greenhouse gases in their procurement policies and decisions.

Although multinational companies are making good progress on reducing their own carbon dioxide emissions, their suppliers have been less successful, according to A new era: supplier management in the low-carbon economy, a new report from the nonprofit Carbon Disclosure Project (CDP) and the global consulting firm Accenture. The fourth annual study canvassed CDP's 49 company members and 1,800 of their suppliers.

While 43 percent of CDP member companies had achieved year-on-year emissions reductions, only 28 percent of their suppliers had done so. The gap is surprising considering that there clearly are benefits to be had. Thirty-nine percent of the responding companies had realized monetary savings from their own emission-reduction strategies. In addition, 34.5 percent said they had achieved such benefits as new revenue streams or cost savings as a result of their suppliers' carbon-reduction activities.

The report also found evidence that businesses are paying more attention to how suppliers address climate change. More than two-thirds (67 percent) incorporate carbon management in their procurement guidelines. The percentage of responding companies that use incentives, such as positive external communications or preferential treatment, to reward suppliers that practice good carbon management has tripled in the past three years to 62 percent, up from just 19 percent in 2009 and 28 percent in 2010.

Additionally, 50 percent of responding companies have, or are developing, contractual obligations for suppliers to include information about their greenhouse gas emissions management in their responses to requests for proposals (RFPs).

Buyers clearly take environmental concerns very seriously: 39 percent of respondents in this year's study said they would stop doing business with suppliers that fail to meet formal environmental criteria within five years.

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