The Greening of Supply Chains

With over 50% of the average corporation’s greenhouse gas (GHG) emissions being typically sourced from their supply chain, measuring and managing these emissions has been increasingly critical for large purchasing organizations with thousands of suppliers. In 2011, 57 organizations participated in Carbon Disclosure Project’s (CDP) Supply Chain program; a a program that creates a structured and organized method for measuring and evaluating GHG emissions from members’ supply chains. For its members, CDP helps companies communicate with their suppliers, answer questions and educate suppliers on the importance of understanding the risks and opportunities associated with climate change. The CDP sends requests on behalf of corporations to their supply chain to encourage suppliers to complete the CDP questionnaire. Every year the findings and results from all participating suppliers are compiled into a supply chain report. Below is a summary of the Carbon Disclosure Project Supply Chain Report 2011.

This year the 57 program members received responses from 1,800 of their suppliers. One of the key metrics is whether or not their responding suppliers are measuring emissions and if they are actively managing them through GHG reduction targets. CDP’s report indicates that:

• 80% of suppliers measure Scope 1 and 2 GHG emissions, which is approximately a 20% increase from last year.
• Of the 1,800 responding suppliers, 33% have reported a reduction target with another 20% in the process of developing one.
• Approximately 40% of those who have reported emissions reduction activities have already achieved cost savings as an outcome.^[1]

Takeaways for Suppliers

Almost half of the Supply Chain program members are integrating sustainability criteria into their evaluation of suppliers through scorecards or incentives. Sustainability criteria is expected to become increasingly essential for suppliers as over half of the Supply Chain program members are willing to reject suppliers based on poor performances. A small number of members have already put this into action.^[1]

Reporting to the CDP is growing trend among all companies, not just suppliers for large purchasing organizations. For the second straight year, the number of companies reporting to the CDP has increased by over 20%. In 2011, over 3,700 companies have completed and submitted CDP’s questionnaire.

CDP’s reporting period opens February 1, 2012, but for companies interested in reporting it’s advised to get started at least a month or two prior. Below are three action items provided by the CDP to consider taking before starting to the questionnaire.

• Gathering information prior to completing the questionnaire will help to streamline data entry
• Reading through your last company response
• If your company belongs to a trade or industry association, please verify if these have tailored GHG disclosure guidance that might help with the completion of the questionnaire^[1]

The Carbon Disclosure Project Supply Chain Report 2011 is available for download here and a complete list of Supply Chain members requesting CDP responses from their supply chain is available here.

Renewable Choice has put together some free educational resources including a factsheet, timeline of important dates, and a document explaining how to set reduction targets. You can access the materials here.

^{[1] A.T. KEARNEY. Carbon Disclosure Project Supply Chain Report 2011. Publication. The Carbon Disclosure Project, 2011. Web.}

Ryan Meeks is Sustainability Analyst for Renewable Choice.