CDP survey: 70 percent of firms fear climate threat to revenues

Seven out of 10 companies responding to the latest Carbon Disclosure Project (CDP) survey have admitted that they think climate change has the potential to significantly impact their revenues, with many warning that they expect climate impacts to be felt within the next five years.

The CDP survey sent information requests to the 52 large companies in the group's Supply Chain initiative and more than 6,000 of their suppliers around the world. Only 2,415 suppliers responded to the voluntary information request, meaning that more than 60 percent failed to offer data on their carbon emissions and climate change strategy.

But amongst those that did respond, concerns about climate impacts were widespread, with 51 percent of the climate risks identified by businesses either already having an adverse effect on operations or deemed likely to have an impact within five years.

However, despite concerns about both physical risks to operations and assets and the impact of climate-related policies, the survey also found that relatively few suppliers are taking ambitious action to tackle emissions or develop effective climate change policies.

Just 38 percent of suppliers responding said they had emissions reduction targets in place, compared to 92 percent of the purchasing companies surveyed, including global brands such as Dell, L'Oreal and Walmart.

Similarly, only 27 percent of suppliers said they were investing in measures to curb emissions and energy use, compared to 69 percent of purchasing companies.

"This research illuminates fragility in the global supply chain model. The marked difference in the sustainable actions of companies and their suppliers highlights a missed opportunity for suppliers to reduce energy costs and risks," said CDP's chief executive Paul Simpson in a statement. "The 61 percent of suppliers that failed to provide information through CDP are an even greater concern since they and their clients are unable to make a full assessment of the substantial climate risks or opportunities they face."

His comments were echoed by Gary Hanifan, global sustainability lead for supply chain at Accenture, which worked on the development of the report.

"This report provides clear evidence that those who are most transparent about their climate change risks are more likely to achieve the greatest emissions reductions," he said, noting that those suppliers who had emissions reduction programmes in place reported financial savings $13.7 billion.

"They are also more likely to enjoy monetary savings as a result of their responses to climate change risks," he added. "But the return on investment by the most proactive companies will not reach its full potential unless those companies can encourage their suppliers to follow their lead."

This article originally appeared at BusinessGreen.com and is reprinted with permission.

Photo of industry pollution provided by Lisa S. via Shutterstock.