In February 2021 CDP has released its newest Global Supply Chain Report for the year 2020. The report is based on data and information submitted in the CDP Supply Chain program and provides meaningful insights regarding the supply chain impacts of environmental actions, such as climate-related emission reduction, water security and deforestation targets. The report also explores the state of environmental risks and opportunities in supply chains and how companies face and manage these risks and opportunities.
The CDP Supply Chain program is representing 154 member organizations with a total of 4.3 trillion US$ in annual procurement spend and in 2020 CDP has received over 8,098 unique responses from participants in the Supply Chain program.
Major Supply Chain Challenges Ahead
COVID-19 had severe impacts on the global supply chains and temporarily slowed down the global economy in 2020 which led to seemingly positive outcomes with regard to national climate goals, e.g. in Germany with a 40.8% reduction of greenhouse gas output compared to the base year 1990. But the evaluation by CDP shows a clear challenge ahead: Businesses must collaborate with supply chains and build back better from the COVID-19 pandemic. Companies are facing substantial costs due to environmental supply chains risks. Over the next 5 years major buyers could face increased costs of 120 billion US$ due to these environmental supply chain risks.
Businesses who are not willing to manage environmental supply chain risks will become less competitive and less resilient to challenges that arise with a transformation to a low-carbon economy and ultimately be left behind. Therefore businesses must engage in actions and measures on environmental supply chain risks to face lower costs, better reputation and secure their role in a competitive market with increasing interest and requirements on environmental performance from various stakeholders.
Environmental Scale and Impacts in the Supply Chain
Apart from the accounting and management of operational emissions, more and more businesses recognize the scale and importance of greenhouse gas emissions along the whole value chain. Based on the data provided in the CDP Supply Chain program, supply chain emissions are on average 11.4 times higher than operational emissions. Setting emission reduction targets throughout the complete value chain (including Scope 3) will become a new business norm in order to mitigate potential risks and highlight a comprehensive approach towards supply chain partners and suppliers to create beneficial synergies.
Although there is a rising awareness, businesses are still not cascading measures down the supply chain with only 37% of suppliers engaging their own suppliers to reduce greenhouse gas emissions. Only if businesses along the supply chain will work together and build capacities, ambitious environmental goals will be achieved, e.g. net zero, climate neutrality commitments or science based emission reduction targets issued by the IPCC.
How the DFGE can support you
In a holistic approach, DFGE as a full-service provider deals with the calculation of the carbon footprint up to certification and a possible compensation through climate compensation and protection projects. Furthermore, DFGE is characterized by a resilient scientific process methodology, rejects flat-rate calculations and thus counteracts green-washing.
As a CDP silver climate change consultancy partner we help responding companies with the completion of their CDP questionnaire from data collection to final submission. With our expertise and as accredited provider, we can minimize efforts and resources at your end and ensure a successful participation with our CSR reporting solutions.