The new supply chain report from CDP, the world's leading environmental reporting platform, reveals that climate risks in supply chains represent an untapped opportunity for businesses.

The report highlights that companies could gain approximately USD 165 billion in financial benefits by reducing supply chain emissions. However, it also points out that many companies are still overlooking these opportunities.

CDP’s report, titled "Strengthening the Chain: Sector Insights to Accelerate Sustainable Supply Chain Transformation," analyzed data from over 23,000 companies in 2023. The findings show that measuring and managing supply chain emissions (Scope 3) is essential. It states that the cost of not addressing these risks is nearly three times higher than the measures required to mitigate them. Additionally, the report data indicates that climate-related opportunities in supply chains could generate potential financial gains of USD 165 billion.

Key Findings

• Monitoring and managing supply chain emissions is advantageous for companies
  Ignoring climate-related risks in supply chains could cost nearly three times more than the actions needed to mitigate them. Companies that report climate-related opportunities foresee a potential financial gain of USD 165 billion. Those investing in these initiatives are likely to benefit financially.

• Scope 3 emissions remain a blind spot for many companies
  Only 1 in 4 companies that report include climate risks related to their supply chains in their risk management processes. While more than half of the companies report initiatives to reduce emissions, only 15% of leaders target their value chains in this process. This indicates that a significant portion of a company’s carbon footprint is being entirely overlooked.

• Through CDP’s Supply Chain Program, leading corporate buyers are bringing climate risks in their supply chains to light
  CDP Supply Chain members demonstrate that collaboration and engagement are turning into action. Suppliers reporting through CDP revealed that their customers helped them achieve a 43 million-ton reduction in emissions — a figure greater than Sweden's total annual emissions.

• Banks can support the transition to net-zero targets for large buyers and their suppliers by offering favorable financing conditions tied to environmental criteria
  These financial incentives are highly effective in creating large-scale impacts on emission reductions. Where buyers offer financial incentives, suppliers are 52% more likely to reduce their annual emissions.

CDP’s Supply Chain and Reporting Services Director, Simon Fischweicher:
"Our data tells a very clear story: efficiency, competitiveness, and ambitious climate action go hand in hand. Yes, climate change presents undeniable risks for businesses and global supply chains, but it also offers a significant opportunity for those willing to act. These findings show that companies embracing transparency and tackling supply chain emissions not only reduce climate risks but also achieve financial gains. Those who take action not only enhance their resilience but also strengthen their competitive position in the market by becoming more attractive to customers and investors. In short, measuring and managing supply chain emissions makes business sense. Those who fail to act will be left behind."

Click here to access the report.