The 2012-13 annual Carbon Disclosure Project (CDP) Supply Chain report has been recently published. There is a glut of useful information within the 22 pages, and here are some of the highlights.
Firstly, the report concludes that climate change is creating very real supply chain risks, with 70% of respondents identifying at least one serious risk to their business due to the impacts of climate change. This makes sober reading where ever you are in the value chain of a product and emphasizes the need for a risk based approach to sustainable supply chains.
Secondly, it identifies a persistent performance gap between CDP members and their suppliers with 98% of CDP members having a greenhouse gas emissions reduction target compared to 38% of suppliers. This comes as no great surprise as the CDP members are making a very public commitment to address sustainability in their supply chain. However, there are some interesting numbers behind the headline. For example, 73% of the CDP members report monetary savings from carbon reduction activities while only 29% of suppliers achieved the same result.
The third finding is that leading companies are investing and making a difference. The number of suppliers reporting emissions reductions and monetary savings has both increased from last year. The main driver behind this trend is not risk associated with regulation, but rather customer expectations and risks associated with the physical impacts of climate change.
Perhaps one of the most important conclusions is that supply chain sustainability is creating additional business value. This value is realized in a number of ways, for example process and resource efficiency, emissions reductions, product and service innovation and premium pricing for low-carbon products. Leveraging reputation through sustainability credentials and increasing a company’s awareness of consumer behaviour are also identified by respondents as top opportunities for creating business value this year.
Lastly, the report found that companies should have strong capabilities in data, process and governance in order to achieve a leadership position in supply chain sustainability (an area that many Canadian companies can improve upon). Again, this comes as no great shock and agrees with other reports and research in this area.
So what does all this mean for supply chain professionals? It is clear that momentum is building around supply chain sustainability and that there are very real benefits to investing in it – something that our own research with supply chain professionals has found. It is also apparent there is a growing concern amongst businesses over the operational risks occurring due to the impacts of climate change (e.g. see our article on water use).
All this points to a critical role for supply chain profession, and that armed with the right tools and information supply chain professionals can help lead their companies into a more sustainable and profitable future.