A new report has shown that the world’s largest purchasing organizations, large private and public sector organizations, not only have the ability to drive down emissions across their supply chains, but are actually doing so, achieving reductions equivalent to 434 million tonnes of carbon dioxide in 2016.
The new report was published by environmental data initiative, CDP (formerly the Carbon Disclosure Project), in cooperation with BSR and the Carbon Trust, and represents the results of disclosures made to CDP by suppliers at the request of 89 purchasing organizations that are part of CDP’s supply chain program — including names such as BMW, Johnson & Johnson, Microsoft, and Walmart. Together, these purchasing organizations have a combined spend of $2.7 trillion, and they are using their power to engage their suppliers, asking them to disclose environmental data to CDP.
The findings show that the disclosing companies, a total of 4,366 companies, have reduced their CO2 emissions in line with purchasing organizations’ requests and requirements by 434 million tonnes in 2016 — that’s more than France’s total annual global greenhouse gas emissions.
“Large buyers have a tremendous opportunity to catalyze supplier climate action, both through addressing the drivers of inaction and by elevating and rewarding those suppliers that demonstrate leadership,” explained Tara Norton, Managing Director, BSR. “This year’s report provides practical insights on how buyers can partner with suppliers for mutual benefit, including facilitating access to tools and resources that enable emissions reductions, providing incentives for good performance, and supporting suppliers to improve climate risk management, including setting science-based targets.”
The Missing link: Harnessing the power of purchasing for a sustainable future report also, for the first time, released its supplier engagement leader board, with 29 companies out of over 3,300 companies “recognised as leaders for their work with suppliers to reduce emissions and lower climate-related risks in the supply chain.”
“We congratulate the 29 leading companies that are using their buying clout to drive change across their supply chains,” said Dexter Galvin, Head of Supply Chain, CDP. “Companies have a critical role to play in delivering on the Paris Agreement, and as well as setting their own house in order, it is essential they turn their attention to the risks and opportunities outsourced to their supply chain.”
“By harnessing their purchasing power, big buyers have the potential to deliver the large-scale, rapid change that is needed and lead the way towards our sustainable future.”
Despite a 20% increase since 2015 in the number of big companies requesting climate and water-related data from their suppliers, their sustainability practices and commitments aren’t necessarily translating all the way down the supply chain. Only 22% of companies responding to the CDP survey are engaging with their own suppliers on carbon emissions, and only 16% are engaging with their suppliers on water use. Only 4% have put supply chain carbon emissions targets in place.
So while the top of the chain might be expecting great things from those next down the supply chain, that isn’t necessarily translating any further. And, as the authors of the report explain, “This is a challenge because — although it varies significantly across sectors — on average an organization’s supply chain emissions are four times greater than those from direct operations.”
“Supply chain is the next frontier in sustainability,” added Tom Delay, Chief Executive, Carbon Trust.
“Managing the environmental impact of your own operations is expected behaviour. But the greatest opportunities for reductions are typically outside of direct operational control, in the supply chain. While some are showing what can be done today, the majority do not yet have a clear understanding of how to measure their impact or find the value in working with suppliers. Large public and private sector organizations can deliver change at the scale and speed required to address the challenges of climate change and resource scarcity. We hope that our insight and the examples from the leaders engaged with CDP help to accelerate the shift to a more sustainable, low carbon economy.”