With the successful conclusion of the COP21 Paris Climate Conference in December 2015, collaboration around greenhouse gas emission reduction between governments and companies throughout the developing and developed world has moved from wishful thinking to fact.
Limiting the pace of global warming to no more than two degrees Celsius is now a global movement that is driving companies of every size and description to reduce their annual carbon footprint. Not only does this make good sense politically and socially, but it also makes good business sense. Reducing carbon emissions can save companies money, encourage innovation and reduce risk.
Cutting costs and carbon through collaboration
In order to reduce carbon emissions in a significant and meaningful way, companies must look beyond their own operations and engage their suppliers in the effort.
According to CDP, emissions in the supply chain can be significantly higher than those of a company’s own operational footprint, depending on industry sector and the degree of outsourcing.
CDP, formerly the Carbon Disclosure Project, is an international, not-for-profit organization that provides the leading system for companies, governments and organizations to measure, disclose, manage and share vital environmental information.
In fact, when CDP analyzed the emissions inventories of more than 4000 companies in 2015, upstream emissions (that is, the emissions of companies’ supply chains) were on average more than double that of operational emissions (the local emissions of the individual companies).
Significantly, that difference increased to four times operational emissions when mining and energy companies were excluded from the analysis. And when retailers and other consumer-facing companies were analyzed separately, the difference rose to seven times that of operational emissions.
Clearly, supplier engagement is critical to any company’s emission reduction effort, whether it’s when you’re considering vendor sourcing or examining partnership resources.
CDP’s supply chain members include more than 75 multinational organizations. In 2015 alone, CDP’s supply chain program members were directly responsible for more than 3.5 million tons of carbon emissions reductions. Without their efforts, sequestering that amount of atmospheric carbon would require planting 90 million trees.
Companies already doing their part through collaboration
There are many examples of companies collaborating to reduce emissions and improve sustainability, including the Powerlinx blog, Partnerships Matter: How Ayla and REGEN Are Collaborating to Help Businesses Save on Energy.
Here are some achievements and commitments made by individual CDP members:
- Kellogg Co. has committed to engaging 75 percent of its tier-one suppliers to annually report on carbon activities by 2020.
- By the end of fiscal 2020, Accenture will expand the percentage of its key suppliers who disclose their emissions reduction targets and actions to 75 percent.
- In 2015, BT’s suppliers reported activities that reduced their operational emissions by more than eight million tons.
- L’Oréal’s suppliers reduced their emissions by an average of 207,000 metric tons per year in 2015.
Even more impressive was Walmart’s announcement in November 2015 that it had completed its commitments to eliminate 20 million metric tons of greenhouse gas emissions from its global supply chain, double its fleet efficiency and expand an existing commitment to preserve wildlife habitat.
Agriculture accounts for nearly a third of worldwide GHG emissions, and large food conglomerates dominate the world food business. This is why food industry giant General Mills’ recent announcement may make the biggest difference of all.
In September 2015, the $18 billion company announced its goal to cut greenhouse gas emissions across its entire business (“from farm to fork to landfill”) by a staggering 28 percent within 10 years. It’s the first major food company to set a specific supply chain GHG reduction goal.
The next step
Unfortunately, too few companies are engaging their suppliers on carbon reduction. Of the 4000 companies that disclosed to CDP in 2015, only about a quarter reported engaging with their suppliers.
The first step for any company is to understand their corporate footprint and report it publicly, which is equally true for supply chain emissions management. What’s not measured cannot be managed.
It’s vital to not only find partners that fit your business model and culture, but also find trustworthy partners that will engage effectively and enthusiastically with your sustainability efforts.
Both you and your partners need to be committed to reduce not only your own carbon footprint, but the footprint of your entire supply chain. The Powerlinx platform is the ideal tool for identifying and vetting the best partners for your business. Discover for yourself and register today.