Firms face judgement over supplier engagement on climate change

Companies will be rated on their supplier engagement over climate change issues, with top performers published in January. This is a first, claims the environmental organisation CDP.

Climate-related risk in the supply chain “[presents] a critical focus area for businesses preparing for a carbon-constrained world”, said the UK-based organisation CDP, formerly known as Carbon Disclosure Project.

CDP works with companies to measure and disclose their greenhouse gas emissions they are responsible for. Although it has previously worked with both buyers and suppliers to measure the impact of supply chains, this is the first time CDP will give companies a rating based on supplier engagement.

The organisation said it will publish its first list of top performers in its annual supply chain report next January. From January 2018 it will start publishing lists of “leaders and laggards”, said Sarah Savage, CDP communications manager.

Carbon emissions in the supply chain can be up to four times the level of direct emissions produced by a company, estimates CDP.  “To be able to manage that and to keep track of that [buyers] need to be asking their suppliers what they’re doing,” said Savage.

“They’re a really important focus areas for businesses with large supply chains. That’s why this rating is focusing on what they’re doing to engage with suppliers,” she added. 

CDP’s supply chain programme has been running since 2008, and last year it said more than 4,000 companies disclose information about their supplier relationships. Savage expects to see an increase in participants this year, she said.

Dexter Galvin, head of CDP’s supply chain programme, said companies have the potential to create “significant environmental changes” through their supply chain but added “not enough companies are engaging with their suppliers on [greenhouse gas] emissions and climate change strategy”.

“By shining a light on whether companies are taking responsibility for the emissions hidden in their supply chains, we hope to spur on the laggards and drive a race to the top,” he said.

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