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Big jump in companies asking suppliers to disclose environmental impacts

Supply chain image

The number of large companies calling on their suppliers to provide more information on their environmental performance has increased sharply in the past year, according to the latest update from the investor-backed CDP initiative.

The organization this week confirmed the number of large scale purchasers asking suppliers to report environmental data through its disclosure program has increased 24 percent since last year.

Overall, the organization has seen a net increase of 30 new companies in its supply chain program, taking the total number of organizations signed up past the 150 mark. Together the coalition of private and public sector organizations wield a combined purchasing spend of more than $4 trillion.

New entrants to the scheme include corporate giants Nike, Airbus, Sainsbury's and Ørsted. They join a host of household names, including Walmart, Microsoft and Stanley Black & Decker, as well as public sector bodies such as the New York Metropolitan Transport Authority (NY MTA) and Japan's Environment Ministry.

Through the program, large purchasers issue information requests to around 15,000 of their suppliers, calling for data on their environmental performance. Information requests typically relate to climate impacts, water security risks and deforestation.

The resulting data is used to inform procurement decisions and supplier engagement strategies, ratcheting up pressure on supplier companies to develop credible green strategies and curb their environmental impacts. The bulk of the information requests relate to greenhouse gas emission reporting and mitigation strategies; however, CDP noted that it is also seeing increased numbers of requests on suppliers' deforestation and water security policies. 

The current COVID-19 pandemic and its economic fallout has shown that building resiliency into our global supply chains has never been more vital.
 

Dexter Galvin, global director of corporations and supply chains at CDP, said growing interest in supply chain engagement was unlikely to be derailed by the coronavirus crisis.

"The current COVID-19 pandemic and its economic fallout has shown that building resiliency into our global supply chains has never been more vital," he said. "Global corporations have supply chains that wrap around the globe, touching millions of people, and by holding the purse strings they have the power to drive impact at scale — incentivizing a behavior shift in the companies that supply them. With emissions in the supply chain being on average 5.5 times higher than a company's direct emissions, the buyer-supplier dynamic will make or break whether our economy can reach net zero by 2050, as the science demands."

Jaycee Pribulsky, vice president for sustainable manufacturing and sourcing at Nike, said program membership builds upon the company's track record of supplier engagement.

"Engagement with our extended supply chain and manufacturing partners has been key to Nike's climate strategy for over a decade," she said. "We are pleased to join CDP as a supply chain member this year to further support our suppliers in reducing emissions and strengthening their climate resiliency. We look forward to working with CDP to catalyze greater action among our supply chain partners and drive impact at scale as Nike works toward meeting our 2030 science-based target."

Her comments were echoed by Rasmus Skov, head of sustainability at Ørsted, who said there was an urgent need for businesses to "collaborate across supply chains to cut emissions at the pace and scale demanded by science."

"At Ørsted, we encourage our top suppliers in the renewable energy industry to make carbon reductions a part of their business strategy," he added. "This is key to staying competitive and accelerating the global transformation to green energy. With the help of CDP, we're asking suppliers to disclose their own emissions and set science-based carbon reduction targets."

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