Most companies not sharing benefits of carbon reduction with suppliers

1 February 2012

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1 February 2012 | Adam Leach

Eight out of 10 companies fail to disclose the benefits of reducing carbon emissions to their suppliers, leaving a gulf between the performance of the two, a study has found.

A New Era: Supplier Management in the Low-Carbon Economy, published today by the Carbon Disclosure Project and Accenture, said companies were showing a positive shift toward new low-carbon business models with Asia and Europe leading on supplier transparency of climate change strategy. However, it saidwhile significant progress has been made by companies to reduce carbon emissions, challenges remain in their supply chains. In many cases, it said, companies could do more to promote the benefits – such as cost savings – that could be achieved through lower carbon use.

The report, which looked at the performance of 49 member companies, cited PepsiCo, who worked with suppliers in Chile to help them reduce water usage by 35 per cent, Wal-Mart assisting supplier Dana Undies to cut its energy bill by 71 per cent by suggesting energy efficiency measures, and Vodafone for assessing suppliers every six months on their sustainability performance, as leading examples.

The Carbon Disclosure Project praised companies for quantifying their initiatives but concluded that the widespread communication of the benefits to suppliers had a way to go. The report said: “Some 34.5 per cent of member companies claim to have realised new revenue or savings from their suppliers’ carbon-reduction activities, but only 24 per cent help suppliers identify those factors in their own organisations.”

Progress is also needed in putting carbon reduction programmes into a stricter financial context. “More fundamentally, only 20 per cent of companies report an estimated monetary value for the supply chain initiatives they have undertaken to improve carbon management,” it said.

Frances Way, programme director for the Carbon Disclosure Project, said it is working to promote the value of better accounting in carbon reduction initiatives. She told SM: “At the moment they [companies] are not looking at carbon reduction in a way to constantly calculate a return on investment, to show that there’s a monetary value in it.”

“We’re really trying to get to that next step of thinking of: ‘Ok, so you’re starting a project, what’s the baseline and how are you going to work out the benefits at the end of the project?’”

Gary Hanifan, global sustainability lead for supply chain at Accenture, said that it is becoming increasingly important for companies to consider how “their supply chains will stand up under environmental scrutiny”.

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