New York: Following the historic international deal agreed at the UN climate conference, COP21, and the news from Davos that climate change is the world’s most impactful risk, leading companies such as Dell, Unilever and Walmart are establishing the extent to which impending climate regulation will impact their business. However, half their key suppliers fail to respond to requests for climate information, hindering efforts to understand and manage climate risk. So finds the largest ever study of climate data from suppliers and their corporate customers, produced by CDP (formerly the Carbon Disclosure Project) and written in partnership with global non-profit BSR.
The COP21 Paris agreement requires global greenhouse gas (GHG) emissions to reduce to net zero well before the end of the century. With supply chains responsible for up to four times the GHGs of a company’s direct operations, they house sizable regulatory risk but also present ample opportunity for businesses to lower emissions.
For this reason, 75 multinationals representing over US $2 trillion in procurement spending work with CDP – providers of the global environmental disclosure platform – to seek data from 7,879 key suppliers on their carbon emissions and climate risk strategies. Information was received from 4,005 suppliers, meaning 49% failed to fulfill their customers’ requests, creating a substantial blind-spot for those preparing for a carbon constrained world.
Paul Simpson, Chief Executive Officer of CDP says: “The science and the policy have never been clearer. Greenhouse gas emissions must decrease to net zero as early as possible in the second half of the century. Companies have a vital role to play in implementing the Paris agreement. Those that are unable to do so risk being the losers from this inevitable transition.”
Analysis of the suppliers that have disclosed demonstrates the scale of risk now facing companies: close to three quarters (72%) state that climate change presents risks that could significantly impact their business operations, revenue or expenditure. The majority (64%) of suppliers specifically identify climate regulation as a risk, with the most commonly cited consequences being fuel, energy and carbon taxes.
Despite the high perception of climate related risk, less than half (45%) the participating suppliers have set a target to reduce their emissions and just one third (34%) have lowered their GHGs in the past reporting year.