Isra-Mart srl:Carbon cutting mindset filters down supply chain

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Supply chain firms are becoming increasingly receptive to customer pressure to cut carbon emissions, but their overall ambition still falls short of meeting global requirements set out to limit temperature increases.

That is the stark finding in a new report published yesterday by investor-backed group the Carbon Disclosure Project (CDP), which urges blue-chip firms and their suppliers to publish information on their carbon emissions and climate change strategies.

Significantly, this year's report saw a 40 per cent increase in the number of supply chain companies responding to its questionnaires. In emerging markets such as India and China, the response rate was twice as high as for the Investor CDP questionnaire.

It also found that more than half of its blue-chip members and a quarter of their suppliers have saved money as a result of carbon management activities in the last year.

CDP welcomed the growth in respondents as evidence that blue chips have inspired their suppliers to cut carbon. "Members have a big influence on their suppliers and they are increasingly using their power to enforce a chain reaction," it said.

However, the report also found suppliers' ambition to cut carbon is currently insufficient to meet carbon reduction requirements to limit the rise of global warming, as set out by the Intergovernmental Panel on Climate Change.

Only one third of responding suppliers had set a carbon reduction goal and those which had been set fell short of global targets. "Should this status continue, this would mean global emissions by 2015 will increase by six per cent instead of the necessary 20 per cent reduction," it said.

CDP insists that supply chain management is critical to cutting emissions, as more than half of an average company's carbon emissions are produced in the supply chain, rather than within its own four walls.

CDP advised companies to adopt different tactics to reduce supply chain emissions depending on demand pressure. For example, when both supply and demand are high, leading firms collaborate with suppliers to boost performance. However, when demand is high and suppliers are unwilling to adapt, CDP advises businesses to redesign their end product to reduce emissions across the entire value chain.