Mobilizing Suppliers to Achieve a Low Carbon, Climate Resilient World
This year’s Climate and Society class is out in the field (or lab or office) completing a summer internship or thesis. They’ll be documenting their experiences one blog post at a time. Read on to see what they’re up to.
Anna De Petrini, C+S ’16
Climate change is real and so are its impacts. That’s why 195 nations from around the world came together last December to sign the Paris Agreement. This marks the first global agreement aimed at keeping the global average temperature increase below 2°C.
In order to remain below the 2°C threshold, global greenhouse gas emissions will have to be reduced by a lot in the coming decades. Some studies have set the Paris minimum required global reduction to 60 percent by 2050 and carbon neutrality by the end of the century.
Whether or not that is even possible, I honestly don’t know. However, what I do know is that this goal will never be achieved without involving the private sector and suppliers on a global scale. What makes supply chains so critical to mitigating climate change? The fact that they’re responsible for most of the world’s greenhouse gas emissions. According to the Environmental Protection Agency (EPA) over 75 percent of greenhouse gas emissions for many sectors of the American industry originate in the supply chain.
Environmentally sound choices need to be integrated in supply chain management.
In my opinion, there are three main reasons why supply chains and the private companies that set them up should get involved in mitigating climate change.
Following the Paris Agreement, supply chains may face stronger regulations and legal risks in the future as governments put restrictions on greenhouse gas emissions. By reducing emissions today, suppliers can stay ahead of the curve.
Businesses face growing physical risks from climate change. Supply chains need to be able to adapt to changes in natural resources availability including water depletion, food security and deforestation. The risk of infrastructure damage from the increasing intensity of extreme weather events could result in disrupted supply chains and transport routes, which again gives businesses incentives to start planning for future disruptions now.
Finally, given that supply chains account for more than half of all expenditures, reducing their carbon footprint can cut costs and provide economic benefits. It also boosts the company’s image and could help improve their bottom line.
As businesses begin to worry about the climate resiliency of their supply chains, more and more suppliers want to manage their carbon emissions and climate risks. That is where CDP, a non-profit organization that measures and discloses environmental information, comes into play.
CDP is the first global scoring mechanism to collect and assess its member’s carbon emissions and climate change information. By doing that, CDP helps promote greater environmental stewardship and active leadership in combating climate change risks in businesses.
As part of my summer internship, I had the opportunity to learn more about CDP’s supply chain program, which assesses the climate resiliency of its supplier members using the CDP disclosure platform. Through self-reporting questionnaires, the program evaluates the member’s carbon emissions reduction goals and efforts, climate risk vulnerability and awareness as well as its ability to address these risk in the supply chain.
Reporting climate information is beneficial for several reasons. It helps suppliers become aware of and understand their climate-related risks which is good for risk management and business in the long-run. Reporting the data increases transparency and also allows benchmarking to move towards building a sustainable economy.
It also can spur even greater actions that benefit the climate and supply chains alike. Suppliers that have already begun reporting on their climate performance tend to take more action to manage their climate risks and are more likely to reduce their emissions from year to year.
Although more and more businesses are starting to engage in supply chain sustainability and the perception of climate risks has grown from 78 percent in 2013 to 84 percent in 2015, a gap still remains between increased risk awareness and increased level of action. That means the next step is translating expectations of emissions reduction into actions!