Buyer pressure on suppliers in 2016 resulted in the cutting of millions of tonnes of greenhouse gas (GHG) emissions.
A report by non profit CDP said 89 companies, who wield purchasing power of $2.7tn and include BMW, Johnson & Johnson, Microsoft and Wal-Mart, cut 434m tonnes of GHG emissions from their suppliers, more than France’s total emissions in 2014.
“With supply chains responsible for, on average, four times a company’s direct emissions, they are a critical focus area for global corporations seeking to avoid the risks and capitalise on the opportunities presented by the low-carbon transition,” said CDP.
However, the report, which assessed more than 4,300 firms across the world, said companies can do more with their “buying clout” as only 22% work with suppliers to reduce emissions and just 16% engage on water use.
CDP said suppliers had made savings of $12.4bn from emissions reduction projects but they were “failing to capitalise on low-carbon opportunities, with fewer than half setting climate targets”.
The report said barriers to engagement included lack of experience in calculating and managing emissions, a perceived lack of leverage over business partners, costs associated with managing an engagement programme and an absence of mandatory requirements.
Firms also face a lack of transparency, with 47% of suppliers not responding to customer requests for climate and water-related disclosure.
The report, produced in partnership with sustainability non profit BSR and the Carbon Trust, highlighted 29 companies awarded places on CDP’s first “supplier engagement leader board”, recognised for working with suppliers to “reduce emissions and lower climate-related risk in the supply chain”.
These include Braskem S/A, a Brazilian petrochemical firm that runs workshops with suppliers to help them reduce emissions and costs, and Hewlett-Packard, which helped its suppliers avoid 800,000 tonnes of emissions and save $65m with efficiency improvements.
Tara Norton, managing director of BSR, said: “Large buyers have a tremendous opportunity to catalyse supplier climate action, both through addressing the drivers of inaction and by elevating and rewarding those suppliers that demonstrate leadership.”
Tom Delay, chief executive of the Carbon Trust, said: “Supply chain is the next frontier in sustainability. Managing the environment impact of your own operations is expected behaviour. But the greatest opportunities for reductions are typically outside of your direct control, in the supply chain.”
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