Following the historic international deal agreed at the UN climate conference, COP21, and the news from Davos that climate change is the world’s most impactful risk[i], major companies such as L’Oreal, Walmart and Dell are establishing the extent to which impending climate regulation will impact their business.  However, half their key suppliers fail to respond to requests for climate information, hindering efforts to understand and manage climate risk.  So finds the largest ever study of climate data from suppliers and their corporate customers, produced by CDP and written in partnership with BSR.
 
The COP21 Paris agreement requires global greenhouse gas (GHG) emissions to reduce to net zero well before the end of the century.   With supply chains responsible for up to four times the GHGs of a company’s direct operations, they house sizable regulatory risk but also present ample opportunity for businesses to lower emissions.
 
For this reason, 75 multinationals representing over US$2 trillion in procurement spend work with CDP - providers of the global environmental disclosure platform - to seek data from 7,879 key suppliers on their carbon emissions and climate risk strategies.  Information was received from 4,005 suppliers, meaning 49% failed to fulfill their customers’ requests, creating a substantial blind-spot for those preparing for a carbon constrained world.
 
The climate performance of suppliers that disclose to CDP improves with time.  Those that have participated in CDP’s supply chain program for at least the past three years demonstrate a more robust approach to climate management than those disclosing for the first time.  For example, around three quarters of the 1,850 repeat participants have climate risk management procedures in place and are actively reducing emissions.  Fewer than half the 1,258 first time disclosers can claim these advantages, clearly demonstrating that measurement and disclosure lead to better management.
 
Regular disclosers are also better at realizing financial benefits.  Repeat participants achieve an average of US$1.5 million in annual savings for each carbon cutting project, compared to first time disclosers, who average annual savings of US$900,000 per initiative.
  
To enable multinationals to benchmark their performance and drive improvements, CDP will this year score companies on the management of carbon and climate change across their supply chains, with results to be published in the 2017 supply chain report.