Report: supply chain collaboration can boost sustainability and investment return

Collaborating with supply chain partners on sustainability initiatives can boost outcomes, including financial return and reducing a firm’s environmental footprint, according to a new report.

The report comes from CDP and Accenture and uses information from a supply chain programme, where companies can request that their supplier disclose information on how they are approaching climate and water risks and opportunities. This year’s programme involved 66 corporations with $1.3 trillion (£860bn) in procurement spend, generating a data set of 3,396 companies worldwide, up from 2,868 in 2013.

The increase in the number of members that requested information this year shows that corporations are increasingly recognising the importance of climate change issues and are taking steps to address them. Suppliers are also recognising that embracing sustainable practices can boost their customer base, and in turn profits.

The report says, “As the data continues to show, companies that engage with one or more suppliers, consumers, or other partners are more than twice as likely to see a financial return from their emissions reductions investments, and almost twice as likely to reduce emissions, than those who do not engage with their value chain.”

Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, states, “Modern businesses depend on supply chains stretching around the globe. They appreciate that floods thousands of miles away, or drought striking a distant watershed, can make the difference between profit and loss.

“Forward looking companies also appreciate that successful, resilient suppliers are good for business. Suppliers that are better able to tackle sustainability challenges, such as climate change and water risk, are simply better business partners.”

The UK is amongst the countries found to be the most sustainable, noting that the UK has put in place “comprehensive climate change regulations, leading to high levels of emissions reporting, target setting and climate risk management”. In particular it highlights the introduction of mandatory carbon reporting for listed companies from October 2013 and consumers preferences as boosting already high levels of disclosure.

Despite this, the report adds there has been a decline in investment in emissions reduction initiatives, cost savings from reducing emissions, the uptake of low carbon energy, and engagement with value chain partners, when compared to last year, in UK businesses. It links these falls to mixed signals from the government on climate change and renewable policies. As a result respondents want “longer-term policy perspective”.

Photo: Simon Rogers via Freeimages 

Further reading:

We are a long way from achieving stability in supply chains

Investors call for supply chain transparency legislation in UK modern slavery bill

Investor interest in deforestation supply chain risks increasing

Why collaboration improves supply chain sustainability and the ways you can do it

63% of UK investors want to be offered sustainable investment options