US Supply Chains More Vulnerable to Climate Risks
Supply chain sustainability revealed: a country comparison also finds suppliers in China and India deliver the greatest financial return on investment to reduce their greenhouse gas emissions and demonstrate the strongest appetite for collaboration across the value chain.
The research is based on data collected from 3,396 companies on behalf of 66 multinational purchasers that work with CDP to manage the environmental impacts of their supply chains. They account for $1.3 trillion in procurement spend, and include organizations such as Nissan and Unilever.
Analysis and scoring of suppliers’ climate change mitigation strategies, carbon emissions reporting, target setting, emission reduction initiatives, climate risk procedures, uptake of low-carbon energy, and water risk assessment efforts, as disclosed by suppliers to CDP, were used to create a sustainability risk/response matrix that shows how well prepared suppliers across 11 major economies are to mitigate and manage environmental risk in their supply chains.
The sustainability risk/response matrix shows:
- Suppliers in France, the UK, Spain and Germany — in that order — are identified as the most sustainable. However, the report notes a year-on-year decline in the percentage of German suppliers implementing a number of key environmental performance indicators, such as having a climate risk management processes in place, which has dropped from 82 percent to 72 percent.
- Japan is the only country with suppliers that are well-equipped to respond to high climate risks as they have matched their awareness and actions with the high levels of risk to which they are exposed.
- Suppliers in China, Italy and the US are found to be vulnerable. An assessed imbalance between high exposure to climate risk and the steps that suppliers have taken in response to the situation leaves room for improvement for those in these geographies.
Even so, CDP identifies the US as an incubator of leadership, given that the majority of constituents of the CDP Supplier Climate Performance Leadership Index (see graphic)— those suppliers identified as taking the most positive actions to address climate change — are headquartered in the US.
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