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Supply chain reporting on climate risks reaches new heights

<p>Large companies invited an unprecedented number of their suppliers to take part in this year&#39;s CDP&#39;s questionnaire.</p>

It’s summer, and thousands of companies are busy completing the now-familiar annual report submittals about their carbon emissions and sustainability plans to the Carbon Disclosure Project (CDP).

Included in this reporting is the CDP Supply Chain Program, where companies such as Accenture, Coca-Cola Company, Colgate-Palmolive Company, Jaguar Land Rover, Johnson & Johnson and Philips Electronics ask their suppliers to disclose carbon emissions and climate risk data.

More suppliers this year are participating in the survey than ever before, which suggests an increased importance of sustainability along corporate supply chains. Fifty-four companies asked an unprecedented 6,000-plus number of suppliers to respond to the questionnaire. (Last year 4,232 suppliers were invited to participate, and 1,864 replied, which resulted in a 44 percent participation rate). The five-year-old program works with the suppliers of the large companies to track and improve the operations of suppliers as it relates to sustainability and climate change.

How does it work? Suppliers to these companies complete the CDP Supply Chain questionnaire and submit it by July 31. Each supplier has the option of whether to allow this submittal to be public or not. Companies can then access the submitted information online by individual responses or aggregated statistics.

Last year was also the first year that supplier submittals were scored for performance. Previously, suppliers only received disclosure scores. CDP worked with FirstCarbon Solutions to score suppliers on their carbon performance (letter grades A–E) and disclosure completeness (scored 1–100). This scoring methodology is consistent with the scoring programs of other CDP programs.

CDP has several disclosure programs. Its original climate change program involving the world’s largest companies now has 3,700 corporations that disclose their carbon emissions and climate risk data to their shareholders. The project’s database is the largest global collection of self-reported emission data and is used by investors, nonprofits, and researchers. This database has become the de facto global standard for voluntary reporting.

Photo of globe, report and plant provided by violetkaipa via Shutterstock

Ready to Scale

The Supply Chain Program continues to mature and grow each year and is now supported by processes and technology that can scale the program for hundreds of large companies and tens of thousands of suppliers.

One of the tools employed is the CDP Analytics software that is built using technology from SAP.

"Over the past couple of years, CDP has improved the use of data and provides members with analytical tools, including CDP Analytics, which allows companies to take action on the information coming back at them," said Chrystina Gastelum, Senior Manager, CDP Supply Chain at Carbon Disclosure Project.

Using these analytics, large companies that participate in the CDP Supply Chain program have ready access to year-to-year trends in supplier improvements, and suppliers have free access to a well-accepted approach to enhancing sustainability in operations.

Future program enhancements include support using Scope 3 emission reporting, water usage, and improved response quality.

Supplier Scorecard Programs Continue

Companies realize the business value of a supply chain that is environmentally responsible which is also investing in supplier management, supplier scorecard and responsible procurement programs.  Some companies, such as Procter and Gamble, are developing their own supplier scorecard programs. Others use the CDP program. And some, such as Walmart, use both.

For suppliers, scorecard programs are here to stay. Suppliers will continue to receive environmental and sustainability data requests from their top customers and sales prospects. Some sustainability and procurement leaders are already well ahead of this trend and are working to get their companies’ results in the top of their peer group, along with establishing executive alignment and processes in place for future improvement.

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