Suppliers ‘lack ambition’ to cut emissions

Increasing renewable energy use in supply chains could save 1bn tonnes of carbon emissions in one year, according to a report.

The report by non-profit CDP analysed 7,000 suppliers to 125 multinational firms – including L’Oreal, Walmart and Samsung – who between them have a collective procurement spend of $3.6tn.

It found on average the suppliers purchased 11% of their electricity from renewable energy providers. However, 1bn tonnes of emissions could potentially be cut in one year if the suppliers increased the total renewable energy they purchased by 20 percentage points to an average of 31%.

The savings in emissions would equal to the combined emissions of Brazil and Mexico, CDP said. 

The report also found that supply chain emissions are on average 5.5 times higher than a corporate’s direct emissions, but despite this only 4% of suppliers have a renewable energy target. 

Sonya Bhonsle, global director of supply chains at CDP, said: “With supply chain emissions being on average over five times as high as a corporation’s direct emissions, this makes the trillions in procurement spend by large corporate buyers a critical leverage tool for driving climate action at scale.

“With just 4% of suppliers reporting a renewable energy target, we’re not seeing that level of ambition yet. We need to see all buyers engaging proactively with their suppliers to unlock this huge opportunity.”

Suppliers did report emissions savings of 563 tonnes of carbon dioxide equivalent in 2019. Emissions-saving activities such as improved energy efficiency, the use of low-carbon energy, and the reduction of process emissions by suppliers also resulted in savings of $20.2bn in the same year.  

“Sourcing renewable electricity is one of the swiftest ways to slash emissions and accelerate the global transition to lower carbon grids. Suppliers just starting out should sign their first renewable electricity contract aiming to source at least 20% of their total power,” Bhonsle said. 

“Meanwhile, corporations should be rewarding suppliers taking this action in their procurement processes, making renewable energy a matter of business competitiveness.”

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