The 3 'A's' for improving supplier climate performance

Ability

Every supplier has obstacles that block progress, and companies have an opportunity to help them by seeking to locate, understand and surmount those challenges. For example, if a supplier has not done a recent energy audit, the company is unlikely to achieve the highest carbon reduction for the money invested.

It's critical, though, to understand why the audit has not been done, so that the company knows how to help: Maybe the supplier does not yet have a team in place to look at the problem, or maybe an assessment revealed that cost-effective resources are scarce.

Furthermore, suppliers within the same industry will have different levels of maturity, so by understanding the supplier's specific problems, companies will be able to provide the appropriate type of resources. Some suppliers will need basic training on energy management, while others will have advanced carbon-reduction management programs and may instead need to focus on high-level problems such as finding capital for larger projects.

In this context, companies should switch from simply making requests for data to asking, "How can I help?" Armed with an understanding about what suppliers need, companies can structure cost-effective programs that help deliver the coaching, assessments, planning, technical resources and discussion needed to drive performance improvement.

Measurement and Engagement

Modeling can suggest probabilistic opportunities, and standardized accounting, such as with the Greenhouse Gas Protocol framework, provides an important common language. But to ensure that these supplier data-management efforts are driving GHG reduction, companies should make it their business to understand individual suppliers' unique potential and problems on the ground. Doing so can lead suppliers to take ownership over a complex engineering issue, it can help the company work with a large number of diverse suppliers at once, and it can improve mutual understanding between companies and their suppliers -- all while driving carbon reduction.

Is the effort is worth it?  Resource-wise, this approach adds a relatively small boost to help critical sustainability commitments (which, in many cases, are not paying off) that will make them productive. Doing so can help make reporting -- from GHG Protocol-based summaries in the sustainability report to longer CDP disclosures -- more relevant. The alternative may be that companies continue to lack insight into and influence over the business of actually reducing supplier emissions.

Companies that want to improve their supply chain climate impacts should consider adding the "three A's" to supplier engagement and measurement efforts. And for BSR members with suppliers in China, the Supplier Carbon Performance initiative offers a turnkey solution for coaching, conducting on-site energy assessments and developing plans needed to drive large-scale supplier carbon reduction.

Throughout 2013 BSR will lead a series of company workshops on Supplier Carbon Performance including on May 8 and 9 in San Francisco and May 13 with World Resources Institute in Washington, D.C. For more information, contact Ryan Schuchard.

This article originally appeared at BSR Insight and is reprinted with permission.