Transparency to Transformation: A Chain Reaction – By CDP

Businesses must collaborate with supply chains and build back better from COVID-19 – otherwise they will be left behind.

Buyers face substantial costs due to environmental risks in supply chains, which are expected to increase as the planet, society and economy changes.

Suppliers reported financial impacts of US$1.26 trillion from environmental risks in the next 5 years. Many environmental risk highlighted by suppliers will result in cost increases – if passed on, corporate buyers could face a cost hike of US$120 billion.

Business as usual means laggard companies will become less competitive and less resilient – suppliers must be engaged on environmental action to face lower costs, better reputations and, ultimately, secure their survival.

The scale of impact in the supply chain is increasingly being recognized by suppliers. Supply chain emissions are on average 11.4 times higher than operational emissions, more than double previous estimates, due to suppliers improving their emissions accounting.

Setting targets to reduce emissions throughout the value chain (Scope 3) is becoming a new business norm. This is only achievable with strong supply chain engagement.

With CDP, we can measure and influence how our suppliers integrate climate change into their operations. In 2020, 96% of our surveyed suppliers reported their carbon footprint, and 75% shared their targets to reduce it. This visibility allows us to better select, support, and partner with our suppliers on their climate-related targets.