29 January 2018: In 2017, major global companies significantly reduced greenhouse gas (GHG) emissions in their supply chains, according to a report by the environmental disclosure platform CDP. The annual report on the global supply chain finds that companies such as Honda and Microsoft saved around US$14 billion as a result of emission reduction activities.

CDP’s Global Supply Chain Report 2018 titled, ‘Closing the Gap: Scaling up Sustainable Supply Chain Practices,’ is based on climate, water and deforestation-related data collected from over 4,800 companies, and points to increased awareness of climate change-related risks and opportunities down the supply chain. According to the findings, reducing emissions can lead to significant cost savings for both purchasing organizations and their suppliers.

Carbon emissions in supply chains are four times greater than those of a company’s direct operations.

Of those responding to CDP, over 75% of suppliers identified some climate change risks to their business, and more than 50% said they have integrated climate change into their business strategies. The number of companies that address emissions in their supply chains doubled within a year, with emission reductions totaling 551 million metric tonnes of carbon dioxide (CO2). However, if all organizations at every level of the supply chain work to reduce emissions, more can be achieved, the authors note, as carbon emissions in supply chains are approximately four times greater than those of a company’s direct operations. Currently, fewer than 25% of supplier respondents engage with their suppliers to reduce emissions.

More suppliers are also looking at water security in their supply chains, with a 15% increase in suppliers disclosing water data to their customers in 2017. In addition, L’Oréal, McDonald’s and others are among the first to work with CDP to address deforestation in their supply chains.

CDP named 58 companies as ‘Supplier Engagement Leaders’ for their efforts with suppliers to lower carbon emissions and environmental risks in the supply chain. These include Bank of America, Apple and Unilever, among others.

The report also compares the efforts of suppliers in eight major economies to mitigate environmental risk. It finds that 80% of companies in France are likely to have climate change integrated into their businesses. Japanese companies have the highest rates of disclosure, and are the most likely to set emissions reduction targets. Of the organizations on the Supplier Engagement leader board, 33% are from US, followed by 15% from the UK. Of the Chinese respondents, 15% are engaging with their own suppliers on emission reductions. [UNFCCC Press Release] [CDP Press Release] [Global Supply Chain Report 2018 Landing Page] [Publication: Closing the Gap: Scaling up Sustainable Supply Chains]