CDP's supply chain program: Now $2 trillion plus in purchasing power

An oil refinery during over sunrise in Bangkok, Thailand

If imitation is the sincerest form of flattery, then the corporations engaging key suppliers on climate change through CDP’s Supply Chain program should feel extremely honored this year.

As the eighth year of the program kicks off, the members of CDP’s supply chain program have proven that collaboration works. In 2014 suppliers disclosing through CDP at the request of one or more of their customers specifically attributed projects totaling 3.5 million metric tons of CO2e to the direct engagement and encouragement of their key customers. This is almost equivalent to shutting a coal-fired power plant for a whole year.

Moreover, the suppliers themselves are increasingly focusing not just on fulfilling their customers' expectations, but actively are managing the climate impacts of their overall corporate footprint, and looking beyond to engage their own key suppliers and expand their influence further upstream.

Of the nine newest members of CDP’s supply chain program, two-thirds — including Lego Group, Kellogg Company, Toyota Motor Corporation and Volkswagen AG — were asked by their own customers to disclose last year and are now, in turn, holding their own suppliers to similar standards of accountability.

These members were among 75 major purchasing entities April 7 collectively requesting disclosure through CDP from more than 7,700 of their suppliers.

Climate change is a massive, global problem and necessitates unprecedented collective action to realize game-changing multi-stakeholder solutions. Fittingly, this is the largest request from CDP to date; coupled with the investor-led Climate Change request launched in early February, more than 12,800 companies around the world received CDP’s questionnaire this year.

Importantly, against a backdrop of light-touch climate regulation, the U.S. government has joined this influential collaboration, boosting the total purchasing power of CDP’s supply chain program from $1.3 trillion to more than $2 trillion.

Leading the way is the General Services Administration (GSA) — the U.S. government’s leading procurer of goods and services — which is actively engaging major contractors and venders through CDP to help meet President Barack Obama’s executive order mandating a reduction in federal government and its supply chain’s GHG emissions over the next decade.

Under the pilot program, the GSA invited 120 of its largest suppliers to report their climate impacts and GHG reduction targets through CDP. This is an inspiring model: the U.S. government partnering with an international NGO and leading global corporations, including many of its largest suppliers, to standardize the tracking of data and drive action in an efficient, cost-effective way.

As the White House increasingly looks to profile examples of companies and cities showing leadership in profitably tackling climate change, CDP brings the practical elements to the global dialogue: trackable, rankable metrics and credible, replicable stories of success.

And it’s no longer just limited to corporations. This year the program has welcomed its first industry group, the Electronics Industry Citizenship Coalition (EICC), the world’s largest coalition dedicated to electronics supply-chain responsibility.

The EICC has included tracking of GHG emissions in its shared EICC Code of Conduct, highlighted it as an audit requirement, and supports its members who are increasingly making it a procurement requirement for their suppliers. By partnering with a fellow NGO, the EICC is able to help its members reduce the reporting burden and strengthen its visibility of hotspots and efficiencies across the entire electronics value chain.

In an effort to “walk the talk” of the Greenhouse Gas Protocol, the World Resources Institute (WRI) has been reporting voluntarily through CDP for the past two years, and found the process extremely helpful in tracking progress toward their emissions reduction targets. Now, as it looks to capture supplier data for its own Scope 3 reduction goals, WRI has joined CDP’s Supply Chain program. WRI will be writing about its reasons for joining and experiences engaging suppliers through the program — check back on GreenBiz throughout the coming year to follow its progress.

Leading organizations are setting ambitious supply chain goals and engaging key suppliers to move from disclosure to performance to collaboration. They are managing the significant risks that climate change and water scarcity pose to the globalized supply chain model and capitalizing on the multitude of opportunities they present.

As organizations such as GSA, the EICC and WRI join their corporate peers such as Walmart, L’Oreal and Philips to drive this ambition deep within their purchasing practice, the world evolves ever closer to linking all of the key players of the global supply chain towards a common goal of true environmental sustainability.

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