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This blog combines articles from ADEC ESG Solutions, as well as FirstCarbon Solutions (FCS), an ADEC Innovation.
Benchmarking Climate Change Performance Across Supply Chains
Posted by Sonya Bhonsle on Feb 20, 2014 9:21:00 AM
Supply chains are businesses’ lifeblood—they are the means through which products and services are created and delivered to the customer. Supply chains are where you see raw materials travel and transform into goods. Every time you buy a good or service you’re voting with your money for how you want companies and their supply chains to behave.
Creating green supply chains to link companies all over the world is fundamental to helping global sustainability goals. As supply chains are embedded at the core of all businesses, it is therefore important to maximize their potential in helping manage climate risks, ensuring robust bottom lines, and ultimately, helping drive more sustainable economies. This can only be possible with the availability of more standardized and comparable data, strong metrics, and in-depth analyses on the benefits of creating sustainable supply chains to business success and ultimately, to the environment.
CDP’s Supply Chain Program
More than holding expansive repositories of environmental reports from both companies and cities, CDP is also one of the first organizations to recognize the importance of addressing and evaluating the impacts of supply chains to the environment. With that in mind, CDP established its supply chain program in collaborations with some of the largest purchasing companies in the world such as Walmart, L’Oreal, BT and PepsiCo. Together they established a platform where purchasing companies and suppliers can communicate and collaborate to develop more sustainable supply chains worldwide.
The issues of supply chain environmental impacts and resource use has ceased to be an “add on”. Companies who want to stay in business are having to plan for increased risk mitigation plans for extreme weather, increased prices and volatility for raw materials, and finally more interested and discerning customers. Through the supply chain program, member purchasing companies are able to solicit information from their suppliers about their greenhouse gas (GHG) emission levels and resource consumption (water and energy) along with assessing overall environmental risk management. As suppliers communicate their climate risks and opportunities, purchasing companies are able to effectively strategize the reduction of their supply chains’ environmental impacts mainly by engaging suppliers in their sustainability programs and collaborating to achieve a net positive effect to both parties.
However, there is a real need to intensify the development of sustainable supply chains to help the growth of more sustainable businesses. CDP has found that one of the simplest ways to increase supplier activity is to quantify their performance so they can track progress and identify areas for improvement. Much in the same way we understood our strengths and weaknesses at school from report cards and exam results.
Still, more than that suppliers must know where they stand compared to others companies in their industry in terms of sustainability transparency and performance, while purchasing companies must be able to identify the most sustainable suppliers to do business with, or at least engage them in their own sustainability programs. This has ultimately led to the launch of the first ever CDP Supplier Climate Performance Index (SCPLI).
Surmounting Challenges to Creating Sustainable Supply Chains with Measurement and Benchmarking
True to its commitment to forward measurable, results-oriented sustainability initiatives across businesses and governments, FirstCarbon Solutions (FCS) in partnership with CDP, formulated and launched SCPLI as a means to recognize suppliers who extensively report and effectively carry out their initiatives to manage climate risks.
The SCPLI is one of CDP’s initiatives to help create greener supply chains. Together with CDP, FCS aims to provide suppliers with a benchmark for their climate performance. CDP and FCS help identify suppliers who holistically manage their climate risks and seize business opportunities from reducing their GHG emissions. By distinguishing the leading suppliers, CDP and FCS identify the best practices of these businesses, and in turn, give other suppliers sustainability efforts to improve and/or aspire for.
What does a leader look like? Here is a partial tick list for anyone wanting to join the SCPLI:
Suppliers whose executives and leaders establish the planning of climate change mitigation initiatives and monitor the incentives for emission-reducing practices are among the top climate resilient suppliers.
Climate resilient suppliers are also those with comprehensive Scope 1 and Scope 2 GHG measurements in their carbon inventories and corresponding reduction targets.
Top climate resilient suppliers also report their emission reductions, along with supporting evidence—thereby ensuring purchasing their customers of the validity of their GHG cutbacks.
Leading climate-resilient suppliers have their carbon inventories verified by a third-party organization, in order to identify more opportunities for emission reductions and to further the credibility of their emission reports.
Ensuring the Proliferation of Sustainable Supply Chains through Performance Leadership
As more suppliers and customers grow aware of the rising standards in supply chain climate resiliency, not only will they realize the practices and strategies they must employ, but also the benefits of seizing business opportunities from reducing emissions and improving overall climate resiliency. Suppliers will evolve into becoming more efficient, and along the way, they can reap cost savings. They will be able to profit from products and services with less GHG emissions and more importantly, be recognized as a contributor to achieving a sustainable low-carbon future.
FCS has been the exclusive scoring partner for CDP’s Supply Chain Program since 2011.They hold insight into CDP’s questionnaire and scoring methodology, thereby providing first-rate support for suppliers looking to help improve their submissions to CDP. For more information, on how to manage climate change for your business, click here, or click on the link below to speak to one of our experts: