May 01, 2008
Tracking Suppliers' Carbon Footprints
by Anne Moore Odell
The Carbon Disclosure Project reports on the carbon emissions of some of the world's largest
corporations' supply chains.
Investors know that the carbon emissions of the companies they invest with are just the tip of the
emissions iceberg. It is also the worldwide suppliers of publicly traded companies that are pumping
greenhouse gases into the atmosphere. In a move to address supply chain carbon emissions, the Carbon Disclosure Project (CDP) has released
the findings of its Supply Chain Leadership Collaboration. With 385 institutional investors and $57
trillion in assets under management, the CDP is the world's largest investor organization to
confront climate change.
Using the reporting expertise CDP gained in helping
companies detail their greenhouse gas emissions and climate change strategies, the CDP worked with
suppliers of publicly traded companies to report on their carbon footprints. Companies in the
first phase of the Supply Chain Leadership Collaboration include Cadbury Schweppes, Dell, HP,
Imperial Tobacco, L'Oréal, Nestlé, PepsiCo UK & Ireland, Procter & Gamble, Reckitt Benckiser,
Tesco, and Unilever.
"The Collaboration started when companies approached us, wanting to
extend what we've done with them on greenhouse gas reporting to their suppliers," said Paul
Dickinson, CEO of the CDP.
In 2008, over 3,000 companies reported their climate change
data with the non-profit CDP. The CDP website bills itself as "the largest repository of corporate
greenhouse gas emissions data in the world." For the past eight years, CDP has collected data on
climate change, sending questionnaires to the world's largest publicly traded companies. Although
the questionnaire is voluntary, more and more companies are embracing transparency on issues of
climate change risk and opportunity.
The CDP started collecting information on supply
chain carbon footprints in September 2007 when it partnered with Wal-Mart to report on the
retailer's supply chain. The Supply Chain Leadership Collaboration was created in October 2007.
Suppliers are forecasting the potential risk of climate change regulations, with a
whopping 96% of suppliers seeing the risk of upcoming regulations. The most commonly reported
potential risks are increased taxation and emission limits.
Because it was the companies
themselves asking their suppliers for greenhouse gas emission and climate change data, suppliers
felt the pressure to respond. The "purchasing power" that companies have with their suppliers
forces suppliers to monitor their energy usage and carbon footprint suggested Dickinson.
"Investors can be fickle, buying and selling companies as they want," said Dickinson. "The
purchasing partnerships between companies and their suppliers aren't so fickle. They don't want to
let the other party down."
The 144 supply chain participants spanned 22 sectors, from
chemicals to containers. The suppliers were mainly medium and large sized companies. This is the
first time that 95 of the 144 companies reported with the CDP and was also the first time that many
of the suppliers had formally focused on issues of climate change. However, the research also found
that over a third of suppliers already have a board member who is responsible for climate change.
CDP found that over half (58%) of the responding suppliers report the emissions from the
fossil fuel burnt and the electricity they purchase, while only 12% of the suppliers also track
their indirect emissions. Suppliers' indirect emissions, which are a consequence of the supplier's
company but come from sources controlled by others, are much harder for suppliers to measure.
Extreme weather is another worry for suppliers with 47% citing extreme weather as an anathema
Twenty-six percent of surveyed suppliers have created greenhouse gas
A second wave of information requests is taking place this summer as
new members join the Supply Chain Leadership Collaboration. The new companies quizzing their
suppliers include: Carrefour, Colgate-Palmolive, Exelon Corporation, Fiji Water, Heinz, IBM,
Johnson Controls, Juniper Networks, Kellogg Company, Merrill Lynch & Co., National Grid, SSL
International, and Vodafone.
The results of the second phase of Supply Chain Leadership
Collaboration will be released at the end of 2008 and will include more detailed information on
For investors, examining suppliers allows more light to be cast into the
business practices of the companies they invest with. "It becomes another tool to see what a
leading company looks like," said Dickinson. "Companies see that consumers want products that are
sustainable. Companies are asking themselves 'how can I reduce pollution from what I'm selling?'
and that means going all the way back to suppliers."