Suppliers warned to cut emissions to keep contracts

27 September 2011

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27 September 2011 | Adam Leach

More than half of UK companies will drop suppliers in the future if they fail to get carbon emissions under control.

The research, published yesterday by the CarbonTrust Advisory, suggests that due to mounting pressure from shareholders for companies to take action on carbon emissions, 56 per cent of UK companies would expect to drop suppliers as a result of poor performance on carbon emissions. This figure was significantly lower for US companies, at 28 per cent.

Furthermore, 50 per cent will base supplier selection on carbon performance in the future.

But although suppliers that fail to control emissions may face financial hardship, those that perform strongly will be rewarded. Some 66 per cent of respondents indicated they would pay a premium in the region of 10 per cent to work with low-carbon suppliers.

Hugh Jones, managing director at the Carbon Trust Advisory, said: “As carbon becomes more widely understood as a commodity, there will be increasing pressure from external sources, particularly shareholders, to make companies address the carbon intensive area of supply chain emissions.”

The study also reported 43 per cent of companies currently provide supplier training in order to help cut emissions, which is expected to rise by a further 18 per cent in the future,.

Niall Dunne, chief sustainability officer at BT, said working with your suppliers is critical: “This is very much a collaborative exercise and we believe in working with our suppliers to help them with the targets and innovation necessary to take large strides in their carbon journey.”

Last week, the Carbon Disclosure Project Global 500 report identified a positive correlation between sustainability performance and overall profitability. In the report, German car manufacturer BMW was praised for cutting the carbon footprint for its new sustainable i3 model by 50 per cent.

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