Supply chain gurus take note!
Coming on the heels of Paris, the Carbon Disclosure Project has just put out its 2016 report "From Agreement to Action: Mobilizing Suppliers toward a Climate Resilient World". CDP has the biggest carbon reporting program going, generating information that the financial world and the public can use to evaluate multinational corporate performance on carbon reductions. Because such a large percentage of a company's carbon emissions come from its supply chains, CDP developed a special program focus in this area, and I am a huge fan.
There are now 75 participating companies in the CDP Supply Chain Program, with US$2 trillion in combined annual procurement. To be a member, you must simply be willing to ask your suppliers whether they have assessed their climate risk, set carbon reduction goals, and most importantly, undertaken any actual carbon reductions, among other things. It is hard to imagine how any manufacturing corporation could set its own carbon reduction goals without this information, given that so much of its carbon footprint comes from these suppliers. CDP Supply Chain Program members are thus positioned to set and realize reduction goals by rewarding those suppliers with smaller footprints. Without it, companies are not in the game.
So, what are the CDP 2016 supply chain findings? Let me cut right to the heart of the matter and not sugarcoat the results.
First, we must take note that there are only 75 CDP supply chain members, out of the more than 2000 CDP members overall. The 1900+ other members are ignoring their supply chain emissions, in massive violation of the Willie Sutton Rule, which I have described previously here.
From there, things do not get much better:
- Slightly less than half of the 75 CDP supply chain members had suppliers who were willing to even fill out the survey, and
- Those suppliers who did fill out the survey were all "essentially inactive when it came to emissions reductions. " (That's according to McKinsey, the trusted business management consultant and CDP collaborator on the report, on page 30, not Linda Greer)
So, my friends, another report that confirms that we are far, far from where we need to be on reducing pollution from factories that supply multinational corporations. This is certainly what we see over and over again in our work on air and water pollution from those same factories, which are often creating egregious threats to human health and the environment without business consequences with their important buyers (Learn more about IPE here).
CDP announces in its report that in the coming year, it will begin scoring companies for their supply chain activities, with the hopes of recognizing the handful of leaders in this space and pressing harder for more action from the rest. Bravo, I say! Definitely a step in the right direction, and I look forward to that.
While we are waiting, it's past time for the rest of us to start calling out when companies are missing the boat on supply chain and wasting time/gaining PR points, when doing things that have a lot less environmental impact, particularly as they tout their sustainability programs in their glossy annual reports. Buzzfeed's recent story on Gap, Inc., which just announced a new commitment to halve its greenhouse emissions by 2020, did just that. Right in the headline, Buzzfeed pointed out that Gap's commitment covered only the company's stores, offices and distribution facilities, but not the third-party factories that produce its clothes, where the vast majority of Gap's carbon lies. The devil is in the details, Gap, and we know you know better.