Global Purchasers Leverage Spending Power to Drive Low-Carbon Transition
A record number of the world’s largest purchasers in the private and public sectors, representing a combined annual spend of more than $2.7 trillion, are using their purchasing power to achieve sustainable supply chains and manage costly environmental risks.
According to the latest supply chain figures from CDP, an NGO holding a comprehensive set of global corporate environmental data, 89 organizations are requesting carbon emissions and water-related data from over 8,300 suppliers worldwide in 2016, a 20-percent increase on the previous year, when 75 organizations requested data.
New members of CDP’s supply chain program in 2016 include global retail company Metro Group and the U.S. Department of the Navy, which has an annual budget of $170 billion and represents one-third of the total fossil fuel usage of the U.S. military, the world’s single largest consumer of non-renewable energy. They join some of the world’s leading companies, including Dell, Unilever, and Walmart in engaging with their supply chains through CDP.
“It is inspiring to see this surge in the number of companies and governments requesting environmental data from their suppliers through CDP,” said Dexter Galvin, head of CDP’s supply chain program. “As some of the world’s largest purchasers, they wield the power to catalyze action toward the creation of clean, sustainable economies by driving target setting, emissions reductions and adoption of clean energy among thousands of companies who make up their supply chains.”
With supply chains responsible for up to four times the greenhouse gas emissions of a company’s direct operations, they present a primary focus area for businesses preparing for a carbon-constrained world. Data disclosed by suppliers through CDP enables organizations to understand how climate change can impact and potentially weaken supply chains, and helps them future-proof themselves against the associated risks.
While the majority of organizations request information from their suppliers on their carbon emissions, this year’s figures demonstrate a growing concern among purchasers about the significant risks to supply chains posed by water scarcity. The number of organizations requesting water information from their suppliers was up by one-third in 2016 compared to 2015 (from 18 to 24) with 2,100 suppliers around the world asked by CDP to disclose water information in 2016 compared to 1,500 last year.
CDP plans to further expand its supply chain work in 2016 with the development of a supplier financing initiative, aiming to offer preferential rates for investments in low-carbon projects to suppliers in markets with high capital costs. The initiative will involve major global financial organizations and is expected to launch later in 2016, in time for companies to benefit in CDP’s 2017 disclosure cycle, which starts in April 2017.