Supply chain report reveals need to improve supplier awareness of climate change threats

March 8th, 2009 - 1:04 pm ICT by ANI  

Washington, March 8 (ANI): The first ever global collaboration on climate change between major organisations and their suppliers has demonstrated the need for increased supplier awareness of the regulatory, physical and general risks that climate change poses to their business. Of 634 suppliers surveyed globally by the Carbon Disclosure Project (CDP), only 58 percent considered that climate change posed a risk to their operations, while one third said it posed no risk, showing there is still a lack of understanding from suppliers of the business threats from climate change. Cadbury, Colgate-Palmolive, Johnson & Johnson, Juniper Networks, P&G, Unilever and Vodafone are amongst the 34 member companies using the CDP system to request major suppliers report on their carbon footprint and climate change strategies in order to maintain a resilient and sustainable supply chain. Between 40-60 percent of organisations” total greenhouse gas emissions are recognised as residing outside their direct control and are found within the supply chain through activities such as processing, packaging and transportation. It is therefore critical for senior management to understand climate change risks within their supply chain and how suppliers are managing those risks. This CDP process is the first to bring together the huge purchasing power of global corporations to provide a standard reporting model for suppliers to advance carbon disclosure in the supply chain. Suppliers were invited to complete an information request examining their carbon risks and opportunities, emissions, reduction targets and plans, governance and product lifecycles. 634 suppliers responded globally, with the proportion of response rates from invited suppliers highest from North America. Suppliers to the 34 member companies span multiple sectors and countries. The report indicated that Asian suppliers are using governance and employee incentives to drive positive action in carbon and climate change activity. Of the 77 responding suppliers based in Asia, 66 percent cite board level responsibility for climate change issues, above the 54 percent average. In addition, 39 percent of responding Asian companies reported the use of employee incentives, which can be a key lever for change. According to Frances Way, Head of Supply Chain at CDP, “Procurement teams worldwide must take a role in developing more sustainable business practices and embed the issue of climate change into an organisation’’s core operations.” “Risks posed to a company’’s supply chain from the impacts of climate change include extreme weather events, water scarcity, regulation and associated cost volatility. Companies must take steps to mitigate the impact of these risks to their business,” he said. (ANI)

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