Vital Efficienci Ltd.

Carbon management tops supplier criteria

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New report shows 56% leading companies expect to deselect suppliers in the future for failing to meet carbon management criteria, reports Envido.

A Carbon Disclosure Project (CDP) report, produced by A.T. Kearney, shows suppliers are now expected by some of their global customers to demonstrate carbon emissions management, awareness and action, in order to maintain business relationships.

The second annual CDP Supply Chain Report summarizes climate change information from 710 suppliers, including global customers, such as Dell, Juniper Networks, National Grid, PepsiCo and Reckitt Benckiser. These companies are requesting their suppliers to disclose data via the CDP Supply Chain program.

The report shows that the importance granted by CDP Supply Chain members to carbon management targets versus classic procurement targets is expected to triple in the next five years.

CDP Supply Chain members expect their suppliers to demonstrate strong carbon management strategies

The 44 CDP Supply Chain member companies are leading in carbon management within their own businesses, and are also expecting their suppliers to demonstrate strong carbon management strategies. 89% of CDP Supply Chain members have an established strategy to engage with suppliers on carbon reduction issues.

Currently, 6% of CDP Supply Chain members already deselect suppliers who fail in carbon management. The majority (56%) have stated they actually expect to deselect some suppliers in the future for failing to meet carbon management criteria set by the companies.
Some also indicate that they intend to develop contracts which require improved carbon management.

Ifti Akbar, Managing Director at Envido said: “Major corporations are taking carbon management 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 for the cost-reduction benefits apart from the environmental benefits.”

In 2009, of the 710 suppliers disclosing to their customers through the CDP Supply Chain program, the majority (60%) had appointed a board member responsible for climate change; 56% have a carbon reduction plan, and 38% have committed to clear targets; which tend to be short term. Companies are also reporting considerable cost benefits of carbon reduction programs.

Although the CDP Supply Chain Report shows significant improvement in best practices over last year’s results, suppliers still have a long way to go in terms of carbon reduction.

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