The number of top companies leading the way on tackling emissions in the supply chain has doubled in the past year, according to environmental disclosure platform CDP.
In its report, Closing the Gap: Scaling up sustainable supply chain practices 2018, CDP, with analysis from management consulting firm McKinsey & Company, awarded 58 companies a place on its annual Supplier Engagement leaderboard – double the 29 identified in 2017.
The report is based on climate, water and deforestation-related data collected from 4,872 companies across global supply chains at the request of 99 of the world’s largest purchasing organisations.
The companies represent a combined purchasing power in excess of US$3tn, according to CDP.
The 58 companies named were recognised for their work with suppliers to reduce emissions and lower environmental risks in the supply chain.
Leaders this year include Apple, Microsoft, BT, Nestlé, Panasonic, Rolls-Royce and Unilever, who reduced the carbon footprint of their supply chains while also lowering other environmental risks.
The Kellogg Company was recognised for introducing a 21-country-side programme to support around 294,000 farmers to become more sustainable and build resilience to the impacts of climate change.
Sky was named as a result of pioneering a circular economy model for its products, using sustainable design to create a closed loop system with zero waste to landfill.
The report said reductions equivalent to 551m metric tonnes of CO2 – more than Brazil’s total emissions in 2017 – were reported by suppliers worldwide in 2017. Cost savings of $14bn were reported as a result of the improvements, according to McKinsey & Company.
Dexter Galvin, CDP global director of corporates and supply chains, said with greenhouse gas in supply chains on average four times those arising from a company’s direct operations, addressing upstream environmental risks was vital.
“Big businesses have for some time understood the importance of managing their Scope 1 and 2 emissions but Scope 3 emissions, hidden in the value chain – and far greater in volume – are just as vital,” he said.
“While it’s encouraging that awareness of climate-related risk is filtering down the supply chain, it’s crucial that engagement and action follows. As our findings show, this not only makes sound business sense, but can result in considerable cost saving for both purchasing organisations and their suppliers.”
The study also found that more companies have been looking at water security in their supply chains, leading to a 15% rise in suppliers disclosing water data to their customers through CDP in 2017.
It said the increased leadership was paying dividends, with 76% of suppliers saying they had identified inherent climate change risks to their business and 54% reporting they have integrated climate change into their corporate strategy.
The UK has the most green procurement leaders in Europe, including BT, Interserve, PwC and Rolls-Royce, according to the report.
Gabrielle Giner, BT’s head of sustainable business policy, said: “Reducing our supply chain emissions is an essential component of our ambitious science-based target to help keep global temperature rise below 1.5 degrees Celsius.”
“Working with suppliers through CDP’s supply chain programme is crucial to driving this change,” she said.
However, there is still major room for improvement among supply chain operators, the report also said. When broken down, the data revealed some disparities across regions, industries and supply chain tiers.
Supplying companies in France were found to be the leaders in climate change action, with 80% of respondents reporting integration of climate change into their business and 74% reporting that it had been done at board level.
However, in the US, despite many large companies pledging climate change action, supplier companies lagged behind the global leaders across almost all of CDP’s metrics.
In Brazil, political and economic instability has relegated climate action, with just 21% of supplier respondents reporting that they have set emissions reduction targets.