Corporates still not seeking climate data from supply chain, CDP report shows
Published February 22, 2022
Only 38% of companies engage with their suppliers on climate change, according to the CDP. This figure falls to 16% for water security.
CDP, a global disclosure system which helps organisations from, companies to cities, states and regions reduce CO2 emissions, asked 200 of its corporate members to approach 26,813 of their suppliers for information about climate and environmental impacts in 2021. Less than half (11,400) responded.
The resulting supply chain report, ‘Engaging the chain: driving speed and scale’, shows that 56% of suppliers do not have any climate targets, although this number is increasing on average by 5% per year.
CDP estimates that it could be a decade is before all suppliers reporting in 2021 set any climate target. These are unlikely to be particularly rigorous: of those suppliers that had set targets, only 2.5% are using science-based targets.
More positively, 71% of supplier companies are already reporting operational emissions (Scope 1 and 2), but only 20% reported on Scope 3 emissions. In addition, only 28% reported having a low-carbon transition plan.
“The truth is it’s very complex to account for all your suppliers,” commented Seyed Ebrahimi, Alfa Energy’s principal consultant on sustainability strategy. “It’s just normal that businesses are not meeting supply chain commitments, because they haven’t integrated some aspect of their core business with suppliers. It’s a big task for companies to set Scope 3 emission targets across all 15 categories and there are some major issues with the process of gathering data. Yes, the financial and aviation sector can set scope 3 for suppliers, because of advancements in digitising their chain information but many other industries fall short. The problem applies particularly to sectors such as agri-food, where digitisation of upstream data is still at elementary stage and access to reliable food chain information a huge challenge (top agri-food exporter such as India and China)
But, as Ebrahimi points out, there are many tools out there that companies can draw on, from mathematical models (Extended economic input/models) to advanced/hybrid life cycle assessment tools.
“These are becoming more popular as companies become increasingly educated about what’s possible when mapping and configuring their supply chain and becoming more agile,” says Ebrahimi.
Life cycle analysis is becoming increasingly important as corporates seek to understand their Scope 3 impacts at a product level. The EU is also preparing a standardised life cycle methodology against which companies must substantiate their claims, the Product Environmental Footprint (PEF). Nevertheless, only 2% of suppliers reported any product-level lifecycle footprints to CDP in 2021.
“Alfa Energy is already renowned for calculating Scope 1 and 2 emissions,” says Ebrahimi, “However Scope 3 requires mapping supply chain tools like lifecycle assessment. Alfa’s Sustainability team can organise workshops on extending supply chain services: we are there to help our clients simplify what is a very complex challenge.”