The Strategist

Climate Policy Descends On Suppliers

02/01/2016 - 13:52

Researchers at CDP company (represents 767 institutional investors managing assets worth $ 92 trillion in total) published a procurement review of 75 major multinational companies (including Dell, PepsiCo and Walmart) for $ 2 trillion in terms of minimizing climate risks, and the impact on the climate and water resources. One of the analysts’ conclusions that is the main activity of companies creates an average of half the greenhouse gas emissions than the production of electricity consumption and purchases from suppliers.
In 2015, CDP has collected data for more than 4 thousand global suppliers (51% of the survey’s respondents), most of whom (72%) recognize various climate risks, mainly at the level of regulation (64% of respondents, 38% of whom see the level of danger as average and high) and access to resources. 46% of respondents indicated the presence of natural risks - sea level rise, changes in the perception of temperature or the appearance of tropical cyclones. 40% of suppliers have indicated a wide range of other climate impacts - from changing consumer behavior to the company's reputational risks. However, only 41% of companies evaluate the risks associated with water, 45% - integrate them into business strategy and 36% - carry out a deliberate policy and set clear objectives.

A notable proportion of providers lack adequate climate risk assessment and management procedures in their operations - only 60% of those responded to CDP’s questionnaire have appropriate procedures. Given the suppliers not responded to CDP’s survey (49%) and are less likely to use climatic management, analysts conclude that quality of their understanding of the problems is poor as such and results of their research are inflated to some extent.

At the same time, work with suppliers is one of the main activities of companies investing in mitigating their climate footprint. CDP’s analysts ask companies to work with suppliers for the latter to also began managing their climate risk: measuring and reporting on emissions of carbon dioxide, reducing greenhouse gas emissions and developing adaptation mechanisms for operating management strategies.