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Global Firms Find Sustainable Supply Chain Savings

More than half of large businesses and a quarter of suppliers have seen cost savings as a result of carbon management within procurement, according to a report published by the Carbon Disclosure Project (CDP).

Sustainable supply chain practices are becoming more common, according to the survey (pdf) of 57 multinational CDP members and 1,000 of their suppliers.

The percentage of businesses that track and report supply chain emissions more than doubled in 2010, to 45 percent. And carbon management criteria are increasingly a part of supplier selection, up from 11 percent to 17 percent in 2010, the report said.

The research was carried out by management consulting firm A.T. Kearney.

“Whereas last year we saw a rise in the number of large organizations embedding climate change policy into the business strategy, now these policies are increasingly being put into practice at an operational level, across the entire supply chain,” said CDP program director Frances Way.

“What’s encouraging is that suppliers and large purchasing corporations alike are starting to realize the commercial benefits as a result of collaboration,” Way added.

In one example, PepsiCo used a carbon management strategy and energy assessment tool to find over $60 million in energy savings and a 16 percent reduction in per-unit energy use across its beverage plants, the report said.

The survey found that 72 percent of large businesses have their data verified externally, but only 39 percent of suppliers do so. The report attributed this to the high costs associated with third-party verification.

More than 79 percent of members of the CDP Supply Chain program now employ a formal climate change strategy, up from 63 percent in 2009, the report said. CDP Supply Chain helps companies to gather information on their suppliers, and produces custom reports for each member company based on their procurement practices and their suppliers’ performance.

Last month an Ernst & Young report said that the CDP Supply Chain program is pushing even more organizations to report on these issues.

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