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Supply Chain Report Sees Need to Improve Supplier Awareness of Business Threats from Climate Change

"Addressing carbon is more than just about an Excel spreadsheet. What's needed are strategies for managing corporate carbon emissions to achieve the ultimate goal, that of reductions. The tools to do that already exist, and corporations and their consultatns need to evolve their thinking to reflect the possibility of active carbon management, versus passive measurement." -Michael Meehan, CEO Carbonetworks

New York — March 5, 2009 — The first ever global collaboration on climate change between major organizations and their suppliers demonstrates the need for increased supplier awareness of the regulatory, physical and general risks that climate change poses to their business, according to a new report from the U.K. nonprofit group Carbon Disclosure Project.

Of 634 suppliers surveyed globally by the CDP, only 58 percent considered that climate change posed a risk to their operations, while one-third said it posed no risk. CDP suggested that these findings show there is still a lack of understanding from suppliers of the business threats from climate change.

Cadbury, Colgate-Palmolive, Johnson & Johnson, Juniper Networks, P&G, Unilever and Vodafone are among the 34 member companies using the CDP system to request major suppliers report on their carbon footprint and climate change strategies, with the goal of helping to maintain a resilient and sustainable supply chain. The findings from the "2008 CDP Supply Chain Report," written by PricewaterhouseCoopers LLP, were released today in New York.

Between 40-60 percent of organizations' total greenhouse gas emissions are recognized as residing outside their direct control and are found within the supply chain through activities such as processing, packaging and transportation. CDP maintains that it is therefore critical that senior management understand climate change risks within their supply chain and how suppliers are managing those risks.

CDP said that its process is the first to bring together the huge purchasing power of global corporations to provide a standard reporting model for suppliers to advance carbon disclosure in the supply chain. Suppliers were invited to complete an information request examining their carbon risks and opportunities, emissions, reduction targets and plans, governance and product lifecycles. A total of 634 suppliers responded globally, with the proportion of response rates from invited suppliers highest from North America.

Suppliers to the 34 member companies span multiple sectors and countries. The report indicated that Asian suppliers are using governance and employee incentives to drive positive action in carbon and climate change activity. Of the 77 responding suppliers based in Asia, 66 percent cite board level responsibility for climate change issues, above the 54 percent average.

In addition 39 percent of responding Asian companies reported the use of employee incentives, which can be a key lever for change. Internal board-level ownership and understanding of climate change risks and opportunities is vital to make real progress, CDP said. However, supplier engagement on climate change in Asia differs significantly by country, with Taiwan and Japan dominating the sample and India, China and Thailand demonstrating much lower response rates.