Surge in climate leadership, as Apple, Honda, Microsoft, & others awarded for tackling emissions in the supply chain

• Leading environmental disclosure platform CDP names 58 companies as ‘Supplier Engagement’ leaders including Apple, Bank of America, Honda, Microsoft, Nestlé, Société Générale, Tokyo Gas Co. and Unilever. Number of leaders doubles from 29 last year.
• Greenhouse gas emissions in supply chains on average four times those of company’s direct operations.
• Total emission reductions from over 4,800 suppliers in 2017 reaches 551 million metric tonnes of carbon dioxide – more than Brazil’s total emissions in 2016.
• Cost savings of US$14 billion in 2017 reported as a result of supplier emission reduction activities.

January 29, 2018: The number of companies forging ahead with an industry-leading approach to tackling emissions in the supply chain has doubled in a year, according to new research by CDP, the non-profit global environmental disclosure platform, with analysis provided by McKinsey & Company.

CDP has awarded 58 companies – out of a total of +3,300 – a place on its second annual Supplier Engagement leader board, double the 29 identified in 2017. These leaders – which include Bank of America, BT Group, Nestlé, Panasonic, Rolls Royce, Société Générale, Tokyo Gas Co. and Unilever – are recognized for their work with suppliers to reduce emissions and lower environmental risks in the supply chain.

The leaders are announced as more companies than ever before are looking at water security in their supply chains – leading to a 15% rise in suppliers disclosing water data to their customers through CDP in 2017 – and organizations including Klabin, L'Oréal and McDonald’s are among the first to work with CDP to tackle deforestation in their supply chains.
Examples of leadership among the 58 companies include:

• Ajinomoto: the Japanese food, chemicals and pharmaceuticals corporation worked with a key supplier to become the only company worldwide to sell drinks in 100% recycled heat-resistant PET bottles, reducing the use of virgin plastics from fossil fuels by around 2,000 tonnes a year.
• Kellogg Company: the global food company operates its Origins™ program across 21 countries, supporting around 294,000 farmers to become more sustainable and build resilience to the impacts of climate change.
• Sky: in partnership with a key supplier, the European entertainment and telecommunications company is pioneering a circular economy model for its new set-top box, using sustainable product design to create a closed loop system with zero waste to landfill.

Gabrielle Ginér, Head of Sustainable Business Policy at BT Group said: “We’re proud to be recognized on CDP’s Supplier Engagement leader board for our efforts to engage suppliers on climate change. Reducing our supply chain emissions is an essential component of our ambitious science-based target to help keep global temperature rise below 1.5°C. Working with suppliers through CDP’s supply chain program is crucial to driving this change.”

Closing the Gap: Scaling up sustainable supply chain practices, CDP’s Global Supply Chain Report 2018, is based on climate, water and deforestation-related data collected from 4,872 supplying companies across global supply chains at the request of 99 of the world’s largest purchasing organizations. Wielding a combined purchasing power in excess of US$3 trillion, these organizations include Accenture, BT Group, Cisco, KMPG UK and Philips Lighting.

Last week’s discussions at Davos concerning international trade – which is projected to grow fourfold by 2050, from a baseline year of 2010¹ – and the World Economic Forum’s recently published Global Risks Report 2018 – which confirmed environmental risks as the most significant facing humanity² – has all highlighted the importance of addressing supply chains when tackling environmental challenges. This is especially significant because greenhouse gas emissions located in the supply chain are on average four times higher than those arising from direct operations.

“Delivering on the ambitions of the Paris Agreement will require businesses to play a key role to reduce emissions, manage water resources and limit deforestation within their operations and their supply chains,” commented Patricia Espinosa, Executive Secretary, United Nations Framework Convention on Climate Change, who has written the foreword in the report.

“I am pleased to see that an ever-increasing number of companies reporting to CDP are integrating sustainability-thinking into their business models and applaud the members of the CDP supply chain program for being pioneers in this regard. I encourage businesses to work with suppliers to raise ambition across their supply chain.”

The report – which includes commentary from The Carbon Trust – reveals that this leadership is paying dividends, as awareness of climate change-related risks and opportunities is increasing down the supply chain. Over three quarters (76%) of suppliers responding to CDP have identified some inherent climate change risks to their business and more than half (52%) report that they have integrated climate change into their business strategy.

There is huge potential for positive impact. Reductions equivalent to 551 million metric tonnes of carbon dioxide – more than Brazil’s total emissions in 2016³ – were reported by suppliers worldwide in 2017. This is an increase from 434 million metric tonnes reported in 2016. Cost savings amounting to US$14 billion were reported in 2017 as a result of emissions reduction activities.

Yet, this impact is only a fraction of what could be achieved if all organizations at each tier of the supply chain were engaged and working to drive down emissions. Currently, less than a quarter (23%) of supplier respondents are in turn engaging with their own suppliers to reduce emissions, suggesting that many may be missing out on business opportunities and financial savings.

Dexter Galvin, Global Director of Corporates and Supply Chains at CDP, said: “Big businesses have for some time understood the importance of managing their Scope 1 and 2 emissions, but Scope 3 emissions, hidden in the value chain – and far greater in volume – are just as vital. While it’s encouraging that awareness of climate-related risk is filtering down the supply chain, it’s crucial that engagement and action follows. As our findings show, this not only makes sound business sense, but can result in considerable cost savings for both purchasing organizations and their suppliers.”

Tim Hopper, Responsible Sourcing Manager, at Microsoft, said: “We are delighted to be recognized by CDP as global leaders for our work driving down emissions, improving energy efficiency and managing water risk in our supply chain. Microsoft’s daily interactions with tens of thousands of suppliers around the globe are matters of both great responsibility and opportunity. Our partnership with CDP’s Supply Chain program has helped us establish environmental policies and make our supply chain more sustainable, boosting our competitive advantage for a low-carbon future.”

In addition to a global analysis, the report looked more closely into eight major economies* to compare how well-prepared suppliers are to mitigate environmental risk. It found that suppliers in some countries are taking a clear lead, while others are lagging behind:

• France: Reflecting the national momentum signalled at the recent One Planet Summit in Paris, supplying companies in France are the most likely to have climate change integrated into their business (80%), while 74% report board-level responsibility for climate change
• Japan: Despite the government’s historic focus on energy security over climate change, Japanese companies have the highest rates of disclosure – 87% of suppliers responded to the CDP climate change questionnaire – and are the most likely to set emissions reduction targets (77%).
• United States: The US administration might be withdrawing from the Paris Agreement, but American corporates are saying ‘We are Still In’ and stepping up on climate: 33% of organizations on the Supplier Engagement leader board are US, making it the best-represented nation, ahead of the UK at 15%.
• Brazil: Abundant in national resources, but plagued by economic and political instability, Brazil has the lowest level of target setting (just 21% of respondents have set emissions reduction targets and a mere 8% have set renewable energy targets) and only 6% of supplying companies are engaging with their own suppliers on climate change.
• China: While it has above-average disclosure rates for Scope 1 and 2 emissions – awareness of which will likely be bolstered by the recently announced national emissions trading system – only 15% of Chinese respondents are engaging with their own suppliers on the issue.

Steven Swartz, a partner in the McKinsey & Company Southern California office said: “We’re seeing investors and businesses placing substantial capital into the low-carbon economy, driven by the expectation of sound long-term economics. This is a major opportunity for businesses to take the lead, and an especially good time for them to have impact as cost of clean technology continues to fall.”

-Ends-

Notes to editors

For more information, or exclusive interviews, please contact:

• Charlotte Amaro, CDP
  Tel: +44 (0) 203 818 3915 | Email : [email protected]

• Caroline Barraclough, ESG Communications
  Tel: +44 (0)7503 771694 | Email: [email protected]

Supplier Engagement leader board
The 58 companies recognized on CDP’s second Supplier Engagement leader board are:

Click here for information on the methodology behind the Supplier Engagement leader board.

About the CDP Global Supply Chain Report 2018
In 2017, CDP collected data on behalf of 99 Supply Chain members from: 4,858 companies responding to the climate change questions within the CDP supply chain questionnaire; 1,452 responding to the water questions; and 88 responding to the forests questions. This represents data across 51 different industry groups/segments and 86 different countries. The total number of companies invited to participate were 9,139 for the climate questionnaire, 4,850 for the water questionnaire, and 244 for the forests questionnaire.

* The report includes a global analysis, as well as a market-by-market comparison of eight major economies. The economies of Brazil, China, France, Germany, India, Japan, the UK and the USA were identified as the major markets most relevant to the purchasing organizations working with CDP, and as where CDP had sufficient data.

More details on the CDP supply chain program can be found here.

About CDP
CDP is an international non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. Voted number one climate research provider by investors and working with institutional investors with assets of US$100 trillion, we leverage investor and buyer power to motivate companies to disclose and manage their environmental impacts. Over 6,300 companies with some 55% of global market capitalization disclosed environmental data through CDP in 2017. This is in addition to the over 500 cities and 100 states and regions who disclosed, making CDP’s platform one of the richest sources of information globally on how companies and governments are driving environmental change. CDP, formerly Carbon Disclosure Project, is a founding member of the We Mean Business Coalition. Follow us @CDP to find out more.

¹ The Carbon Footprint of Global Trade, by the International Transport Forum https://www.itf-oecd.org/sites/default/files/docs/cop-pdf-06.pdf
² The Global Risk Report 2018, by the World Economic Forum http://www3.weforum.org/docs/WEF_GRR18_Report.pdf
³ Brazil's total carbon dioxide emissions in 2016 were 487 million metric tonnes http://www.globalcarbonatlas.org/en/CO2-emissions