Despite improving their own carbon performance, multinational companies are not yet demonstrating significant emissions reductions in their supply chains, according to research published by the Carbon Disclosure Project (CDP) and Accenture. 

The report revealed that while 43% of responding companies have achieved year-on-year emissions reductions, only 28% of suppliers have done so.

The global study finds that the gulf  between company emissions and those of their suppliers exists despite the fact that 39% of responding companies have realised monetary savings from their own emissions reductions activities and over a third (34.5%) of responding companies have benefited from new revenue streams or financial savings as a result of their suppliers’ carbon reduction activities. 

Extreme weather events disrupted 30% of responding companies’ supply chains in the past year alone and more than half (53%) of the suppliers identify certain or likely exposure to increased operational costs as a direct result of climate change, compounding the need for greater action to reduce Scope 3 emissions - those emissions that occur beyond direct operations and account for as much as 86% of a company’s carbon footprint.

The report does reveal, however, that leading businesses are changing their operating models.

It shows a marked rise in the proportion of responding companies with climate change strategies that incorporate procurement guidelines (90%, up from 74% in 2009 and 79% in 2010) and that 67% of responding companies include carbon management in procurement policy.

The proportion of responding companies that claim they will deselect suppliers who fail to meet formal environmental criteria within five years has more than doubled from 17% in 2009 to 39% in 2011 and two thirds (63%) of responding companies are also investing in training their procurement staff in supply chain carbon management, a dramatic rise from 26% in 2009 and 41% in 2010.

“Companies are evolving the way they operate to better capitalise on the opportunities presented by carbon efficient supply chains,” says Frances Way, program director for CDP, “Such a large shift in companies’ procurement models is encouraging but since these trends are only now emerging, we are yet to see a transformational impact on suppliers’ emissions.”

The proportion of responding companies that use incentives, such as positive external communications or preferential treatment, to reward suppliers with good carbon management has increased more than threefold within a three year timeframe.

More than half (62%) of responding companies now also report an incentives policy for those suppliers with effective emissions reduction strategies, a figure which stood at just 19% in 2009 and 28% in 2010.

Additionally, 50% of responding companies have, or are developing, contractual obligations for suppliers to include information on their greenhouse gas (GHG) emissions management in response to requests for proposals (RFPs).