February 14, 2011
Carbon Disclosure Project Publishes Third Supply Chain Report
by Robert Kropp
The 57 corporate members of the CDP Supply Chain program received responses on emissions reduction
from over 1,000 supply chain companies, a 40% improvement over 2009.
As the CDP Supply Chain
program of the Carbon Disclosure Project
(CDP) points out, greenhouse gas (GHG) emissions from companies in the supply chains of major
corporations often exceed those of the corporations themselves.
According to the
recently published Carbon Disclosure
Project 2011 Supply Chain Report, "Over 50% of an average corporation's carbon emissions are
typically from supply chain." A 2008 analysis published in the McKinsey Quarterly found that as much as 60% of
corporate GHG emissions originate in supply chains.
The report, the third since CDP Supply
Chain was launched in 2007, details the results of engagement by 57 corporate members of the
program with over 1,000 suppliers. In 2009, the program had 44 corporate members.
2010," the report states, "Supplier response to CDP grew by 40%." Furthermore, the report
continues, "In the emerging markets…the response rate for the CDP Supply Chain questionnaire was
twice as high as for the Investor CDP questionnaire," demonstrating the influence of CDP Supply
Twenty-five of the current members are headquartered in the US. Of them,
three—Dell, PepsiCo, and Wal-Mart—have been designated as lead members by the program. According to
the report, lead members have driven the development of "a roadmap for supplier assessment," which
consists of "a common sub-set of questions that will be used to assess a supplier’s performance in
carbon and climate change management against three stages" of progress.
Tcholak-Antitch, Director of the Americas for CDP, told SocialFunds.com, "What we've found this
year is that companies that are part of our supply chain management group have been a lot more
active in engaging with their suppliers. They've been giving them practical help, providing
workshops and seminars for them."
"It's a difficult thing, to fulfill a CDP
questionnaire," Tcholak-Antitch continued. "It takes a lot of work, a lot of preparation. Suppliers
are now getting more support and becoming more comfortable with the process."
report warns that only one-third of suppliers have emissions reduction targets in place, almost 90%
of the corporate members have committed to such targets, an increase from the 82% reported in 2009.
Even so, the report observes, the targets currently in place fail to meet the reduction targets
established by the Intergovernmental Panel on Climate
"Urgent change is therefore required to meet the necessary economy-wide
carbon reduction requirements," the report states. However, the report continues, member
corporations and their suppliers increasingly consider a climate change strategy to be a strategic
opportunity. Reporting of scope 1 (direct) and scope 2 (purchased electricity) emissions have
increased from 60% in 2009 to 80%, and 60% of suppliers are now engaged in reducing carbon
Reporting on scope 3 emissions, which include such indirect sources as supply
chains, "Remains a challenge for most companies," according to the report. "However, significantly
more members now track and report their own supply chain emissions – this more than doubled in 2010
Tcholak-Antitch said, "Businesses are starting to see a return on their
investment from embedding sustainable procurement practices. More than 50% of large businesses and
more than 25% of their suppliers are already seeing cost savings as a result of carbon management."
As an example of the cost savings gained by carbon management, the report describes the
efforts of PepsiCo, a member since 2007. "PepsiCo's own operations have seen a 16 percent reduction
in per-unit energy use in beverage plants since they have begun implementing more than $60 million
in energy savings opportunities," according to the report.
The report recommends that
corporations use differentiated levers for reducing emissions in their supply chains. The levers
described in the report include reductions in external demand for carbon, the integration of
sustainability criteria into Requests for Proposal (RFPs), collaboration to improve performance,
and the design of products that reduce carbon impacts.
The report also calls for
improvements in data accuracy to help suppliers commit to meaningful emissions reduction targets.
To this end, CDP has redesigned its own questionnaire for 2011, to reduce "the reporting burden on
"CDP expects that the shorter and more specific questionnaire will
improve the quality of reported data," the report states.
In 2010, CDP requests for
climate change information were sent to more than 4,700 of the world's largest corporations, on
behalf of 534 institutional investors with $64 trillion in assets under management. Almost 2,500
Yet, "It is important that CDP does not just ask for increased
disclosure, but also works to drive emissions reductions," and the report includes a supplier
roadmap intended to improve performance through three stages in the areas of strategic awareness,
carbon reduction ambition, reporting capabilities, and implementation practice.
time a supplier reaches the third stage of the roadmap, it will identify long-term risks and
opportunities, commit to long-term reduction targets, disclose emissions intensity and whether the
figure has been externally verified, and demonstrate emissions reductions on a yearly basis.
"Climate change is not going to wait for a global agreement," Tcholak-Antitch said.
"Corporations, and particularly our supply chain members, know that business can't wait and are
going ahead. In the future, they will be better positioned competitively as a result."