Majority of suppliers identify climate change as risk

Gurjit Degun
29 January 2014

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29 January 2014 | Gurjit Degun

More than 70 per cent of suppliers believe there is a current or future risk related to climate change that has the potential to impact their business.

However, “regulatory uncertainty” is making businesses cautious about investing in reducing emissions.

Research from Carbon Disclosure Project (CDP) and Accenture on supply chain sustainability found 90 per cent of companies that identified it as a current or future risk cited regulatory uncertainty as a barrier to investment. It surveyed 2,868 firms supplying 64 supply chain member companies.

The report, Collaborative Action on Climate Risk, also said average monetary savings from sustainability efforts have fallen by 44 per cent in the last 12 months.

It called on companies to place climate change and sustainability “at the heart of their strategy”. The study said: “Analysis based on CDP’s supply chain program data has, for the first time, identified where emissions are generated within supply chains, and which sections of those supply chains are most likely to provide a return on investments in terms of reducing emissions and generating monetary savings.”

It added that there is “enormous scope” for more collaboration along the supply chain as it identified 2,186 collaborative opportunities.

The CDP and Accenture analysis said: “Companies are often misdirecting their emissions reduction efforts with investment not closely correlated with proven emissions or monetary savings.”

To address this, CDP has launched Action Exchange to “drive targeted action on the most cost effective emissions reductions”. Companies that have already joined and are asking their suppliers to participate include Bank of America, L’Oreal, Philips and Walmart.

CDP CEO Paul Simpson said: “This report establishes that although companies recognise that climate and water risks are on the rise, a mixed regulatory regime is making decisive action difficult.

“When governments introduce a more realistic global price on carbon we expect significantly more investment in emissions reductions from corporates.”

Gary Hanifan, global sustainability lead for supply chain at Accenture, added: “This report provides clear evidence that those who are most transparent about their climate change risks are more likely to achieve the greatest emissions reductions. And they are also more likely to enjoy monetary savings as a result of their responses to climate change risks.

“But the return on investment by the most proactive companies will not reach its full potential unless those companies can encourage their suppliers to follow their lead.”

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