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CDP to Score Companies’ Supply Chain Carbon Management

CDPCDP’s supply chain program will soon begin rating companies on how well they manage carbon and climate change in the supply chain.

The organization, which says it holds the most comprehensive set of global corporate environmental data, already grades companies on their actions to mitigate climate change in its annual Climate Change Report.

But with supply chains responsible for up to four times the greenhouse gas emissions of a company’s direct operations, CDP says supply chains present a critical focus area for businesses preparing for a carbon-constrained world.

To this end CDP today published the methodology behind its new system to assess supply chains.

In 2016, 89 organizations — including global retailer Metro Group and the US Department of the Navy — requested data from more than 8,300 suppliers worldwide through CDP’s supply chain program, which asks companies in the supply chain to report on their environmental performance via an annual questionnaire.

The CDP supplier engagement rating will score all companies that disclose to the 2016 CDP supply chain questionnaire. CDP supply chain members (purchasing organizations that request data from their suppliers via CDP) that themselves disclose to the supply chain or climate change questionnaire will also be evaluated on supplier engagement.

CDP will give scores based on performance across four key areas related to governance, ambition, measurement and supplier engagement.

Companies scoring the highest on supplier engagement on climate issues will be named in the annual CDP supply chain report, released in January 2017. In future years, the report will also list those companies failing to manage carbon and climate change in their supply chains.

“By shining a light on whether companies are taking responsibility for the emissions hidden in their supply chains, we hope to spur on the laggards and drive a race to the top,” said Dexter Galvin, head of CDP’s supply chain program. “This in turn will result in more sustainable supply chains, helping companies to significantly reduce the size of their carbon footprint.”

CDP says the rating system will provide a tool for groups wishing to compare company performance on targeting carbon emissions in the supply chain. For example, Gartner, the US-based information technology research and advisory company, will incorporate CDP’s supplier engagement rating into its own future assessments of corporate supply chains.

CDP’s new rating system follows several high-profile sustainable supply chain announcements in recent weeks.

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