Dealing with Climate Change Down the Chain

New analysis by Ceres looking at how 600 of the largest US businesses are responding to the call to act on climate change is both useful and unsurprising.

Almost two-thirds of the companies, which collectively represent 80% of the US market, have committed to reducing their greenhouse gas emissions. More than half of them, including Coca-Cola, Gap, Intel and Nike, have formal policies to manage their water resources. And almost half have implemented policies to protect the rights of their staff.

Ceres’ senior director Amy Augustine called on business to “lift the floor” rather than merely “raise the ceiling”. “The time has come for bold and scalable solutions, not just from a few leading companies, but from companies in all sectors and of all sizes who need to transition from making commitments to taking concrete actions,” she says.

The widespread conclusion of this and several other assessments of corporate climate change action is: ‘could do better’.

Much of the action needed to scale and bolster the response must come from smaller, harder-to-reach suppliers – companies that are inextricably linked to large multinationals, producing goods and services that drive much of the global economy, from cars and vegetables, to IT networks and fish.

The good news is that evidence suggests the number of companies taking emissions in their supply chain seriously has doubled in the last 12 months. CDP, the not-for-profit that encourages big business disclose their environmental impacts, recognised 58 companies as “supplier engagement leaders” which is twice as many as were named in 2017. These include the likes of Cisco, HPE, Nestlé and Unilever which received the acknowledgement because of their efforts to work with suppliers to help them reduce their emissions, thus reducing the environmental risks attached to their supply chains.

The organisation also pointed to a 15% jump in the number of firms looking at water security among suppliers and how they communicate water data to customers. Companies like McDonald’s also work with CDP to disclose information related to their supplier impacts on deforestation.

CDP claims that this type of leadership is paying dividends, as awareness of risks and opportunities associated with climate change shift downstream. More than 75% of the suppliers that responded to a CDP data request have noted inherent climate change risks to their business, and more than half of them say they have now integrated climate change into their business strategy as a result.

There is, of course, big environmental advantages to such disclosure and action too. CDP data shows suppliers made carbon reductions equivalent to 551 million metric tons of CO2 in 2017, a jump of 117 million tons on 2016.

And these cuts to greenhouse gases led to cost savings of $14 billion.

Of course, this is all good news. But it is also frustrating given that supply chain emissions reduction just makes good business sense. Yes, awareness of climate-related risk is filtering down the supply chain. But more action is needed to turn acknowledgment into positive change. As CDP says, “big businesses have for some time understood the importance of managing their Scope 1 and 2 emissions. But Scope 3 emissions, hidden in their value chain – and far greater in volume – are just as vital”.