Supply chain carbon cuts begin to deliver rewards

Businesses that are getting to grips with carbon management in their supply chains are beginning to see returns on their investment, according to the Carbon Disclosure Project (CDP).

The CDP’s new supply chain report says more than half the companies it surveyed have saved costs by building sustainability practices into procurement.

The report concludes that 25 per cent of suppliers have also saved money, and that the increased co-operation between suppliers and companies in other areas is showing the potential for change.

Companies’ supply chains account for about half their total emissions, so they are vital to the increasing employment of formal climate change strategies among businesses, now at about 80 per cent, up from 63 per cent in 2009, the year of the last CDP supply chain report.

The CDP investigated 57 of the world’s largest companies, including Ford, Google, IBM, Kraft Foods and Unilever, and 1000 of their suppliers, and also found improvements are being made within companies.

More businesses are training procurement staff in these practices and incentivizing employees through awards and recognition, while the proportion of businesses that track and report supply chain emissions more than doubled in 2010.

Carbon management criteria are also increasingly being applied to supplier selection, up to 17 per cent of companies from 11 per cent in 2009, and the CDP estimates the figure will be roughly a third within five years.

The CDP singles out PepsiCo as an example of what can be achieved. The drinks giant has already saved more than $60million (£37m, €44m) with a 16 per cent reduction in energy use across its beverage plants, thanks to a carbon management strategy that it introduced back in 2005.

Reporting remains a problem, however, as data reliability and accuracy still need improvement, and although standardized information is emerging among suppliers, very few have their data externally verified because of the high cost.

Although businesses are performing better than a few years ago, corporate ambition on carbon reduction still lags behind the levels needed to combat global warming. However, the CDP insists: ‘There is hope.’

Frances Way, CDP programme director, said: ‘We’re seeing a shift among leading companies in the way they are implementing sustainable, quantifiable climate change policies and practices.

‘Whereas last year we saw a rise in the number of large organizations embedding climate change policy into the business strategy, now these policies are increasingly being put into practice at an operational level, across the entire supply chain.

‘What’s encouraging is that suppliers and large purchasing corporations alike are starting to realize the commercial benefits.’