The Carbon Disclosure Project (CDP) has published the latest report from its Supply Chain programme. There are 57 global corporations who are members of the programme and the report is based on their work in reducing emissions as well as the input from 1,000 participating suppliers worldwide.
With more than half of an average corporation’s carbon emissions coming from their supply chain, rather than within their own operations, managing supply chain emissions is a critical factor in addressing climate change.
The report found that only a third of suppliers have a target for carbon reduction and even the targets that are in place are not sufficient – averaging 3.5% a year. The CDP estimates that this would mean global emissions will increase by 6% by 2015, rather than the 20% reduction required to limit the rise of global temperatures.
However, compared with last year, companies have improved reporting, have clearer responsibility for emissions management and recognise that carbon management presents a cost and revenue opportunity rather than just being a risk mitigation activity.
The report found that the CDP supply chain programme members are leading the way by using different approaches depending on the relationship with their suppliers.
These strategies include:
Reducing external demand for carbon. Travel is an example - rather than direct negotiations with suppliers, video conferences can be used, or rail substituted for plane travel.
Where the company has the power it can select suppliers by integrating sustainability requirements into Requests for Proposal (RFPs). Similarly, it can deselect suppliers that do not meet targets.
When the company and supplier are more inter-dependent, a collaborative process is more effective. The example quoted is of companies that have moved their supplier’s production in-house to achieve significant emission reduction, waste reduction and cost savings.
If the supplier holds the power, then its down to the company to do what it can, for instance by re-designing products to reduce carbon impact. Products such as low-energy electronic devices can be designed to reduce emissions across the entire value chain and in use.
The issue of carbon emissions down the supply chain is coming much more into focus as the much easier internal actions are increasingly in place. It’s not nearly so straightforward to manage supply chain emissions, as the CDP analysis indicates – much depends on the company/supplier relationship.
As business-to-business companies, most IT firms sit in the middle, as both suppliers and supplied. Hardware companies, in particular, have a global supply chain feeding various manufacturing and assembly points, so there’s a lot of attention required to maximise emissions savings.
There are also implications here for IT solutions that manage sourcing and delivery. Adding an emissions factor into the equation can significantly impact preferred choices, given, for example, the transport emissions that might be involved. It’s something that procurement and logistics systems will need to take into account to be considered green IT solutions.