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Carbon Trust framework for sustainable supply chain

How Hewlett-Packard, General Motors, Other Major Purchasers Helped Suppliers Save $12.4 Billion by Reducing Emissions

Carbon Trust framework for sustainable supply chainHewlett-Packard, General Motors and Bank of America are among the major purchasers that are saving billions and reducing emissions by working with their suppliers to improve environmental management, according to a CDP report.

Hewlett-Packard, for example, helped its suppliers avoid 800,000 metric tons of CO2e emissions and save more than $65 million through developing energy-saving action plans targeting local efficiency improvements.

Missing link: Harnessing the power of purchasing for a sustainable future, written in partnership with BSR and the Carbon Trust, also lists 29 companies awarded a position on CDP’s first-ever supplier engagement leader board, selected from more than 3,300 companies that were assessed. CDP has said in future years, the report will also list those companies failing to manage emissions and water risks in their supply chains.

In addition to Hewlett-Packard, the 29 supplier engagement leaders include Braskem, a Brazilian petrochemical company that runs targeted workshops with its suppliers, providing training and technical support on identifying opportunities to reduce emissions and lower costs. Nearly 44 percent of emissions outside Braskem’s direct control (scope 3) are now reported to the company.

Another supplier engagement leader, Dutch technology company Royal Philips, identifies so-called “risk suppliers” that it targets for participation in its supplier sustainability programs. It has also developed a tool to help suppliers with less experience in disclosure to quantify their carbon emissions.

Suppliers worldwide achieved reductions equivalent to 434 million metric tons of carbon dioxide in 2016, the report says. They also reported a combined $12.4 billion in savings from emissions reduction projects.

Despite these savings, however, fewer than half (47 percent) have set climate targets and just 34 percent reported achieving a decrease in emissions in the past year. Only one quarter of respondents are realizing climate opportunities by enabling their own suppliers to reduce emissions, or growing revenue through sales of low-carbon products or services, CDP says.

The report also indicates that the sustainability commitments and practices of leading organizations are not being replicated at scale downwards through the supply chain.

Despite a 20 percent increase since 2015 in the number of big buyers such as Walmart and Microsoft requesting climate and water-related data from their suppliers, this is not translating into downstream action, with only 22 percent of responding companies currently engaging with their own suppliers on carbon emissions and 16 percent engaging with their suppliers on water use.

Common barriers to engagement include companies’ lack of experience in calculating and managing their own emissions, a perceived lack of leverage over business partners, costs associated with managing an engagement program and an absence of mandatory requirements from customers or regulation.

The report contains a four-part framework, developed by the Carbon Trust, that companies can use to reduce carbon emissions and water impacts in their supply chains (see graphic). It includes understanding the risks and opportunities, as well as planning and taking action to embed sustainability within procurement processes.

The CDP report comes as an ISO standard that aims to help companies with sustainable procurement is in the final stages of development, with  final publication slated for this year. ISO 20400 will complement ISO 26000, Guidance on social responsibility, and can be applied to all purchases from office supplies to energy providers, caterers and building materials.

Moving in tandem to ISO 20400, the nonprofit Sustainable Purchasing Leadership Council is currently developing a Sustainable Purchasing Benchmarking System. SPLC’s director of outreach and operations Sam Hummel says the benchmarking system will be consistent with the ISO 20400 approach and help organizations identify high-impact sustainable procurement opportunities.

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