Supply chain is weak link in sustainability

Suppliers' efforts to cut carbon emissions and prepare for the impacts of climate change continue to lag behind those of their multinational customers, according to the latest report from the Carbon Disclosure Project (CDP)

The annual supply chain survey of CDP member companies, which include Jaguar Land Rover, Coca Cola and Unilever, reveals that less than 40% of the 2,363 suppliers polled have carbon reduction targets in place, compared with 92% of their client companies.

Just 27% of suppliers are investing in carbon-cutting measures, whereas 69% of clients do so.

And, despite 70% of companies agreeing that droughts and floods are already affecting their business, or will do so in future, just 45% of suppliers say they identify the physical risks posed by a changing climate to their enterprise. The equivalent figure for CDP members is 90%.

“This research illuminates fragility in the global supply chain model,” said CDP chief executive Paul Simpson. “The marked difference in the sustainable actions of companies and their suppliers highlights a missed opportunity for suppliers to reduce energy costs and risks.”

The findings of the report confirm that CDP members are increasingly benefiting from investing in measures to tackle their carbon footprint.

Almost two-thirds (63%) confirm that they reduced their emissions in 2012, compared with 43% in 2011, while 73% also report associated cost savings – up from 39% in 2011. By contrast, just 29% of suppliers report financial savings as a result of cutting their emissions.

The 2012 supply chain survey results also show that multinationals foresee interruptions to production as the most likely impact of a changing climate, followed by rising operational costs.

When asked how they rank risks posed by climate change, supply chain disruption was rated as high by 55% of firms, outstripping concerns about regulatory risk and access to energy and water.

When asked specifically about water, more than half of CDP’s members said they ranked it as a high or medium risk, but just 6% felt their suppliers were fully engaged with water risks.