Suppliers wake up to climate law risks

Suppliers to large multinationals are increasingly aware of the physical and legislative risks to their business posed by climate change, but relatively few have developed comprehensive strategies for curbing their carbon emissions.

That is the conclusion of the Carbon Disclosure Project's first report from its Supply Chain Leadership Collaboration group, which is aiming to collect carbon data from across the supply chains of some of the world's largest firms, including Cadbury Schweppes, Dell, HP, Nestlé, Procter & Gamble, Tesco and Unilever.

The companies in the group issued information requests for carbon data from firms across their supply chains, including details of their carbon footprint, emission reduction targets and climate change strategy.

Almost a 150 suppliers responded to the requests and of these 58 per cent reported emissions from their own operations and the electricity they purchase, while 12 per cent also reported indirect emissions that are a consequence of their activities but originated in other sources.

Over 95 per cent of suppliers identified greenhouse gas regulation as a potential risk, while 48 per cent that an increase in extreme weather conditions arising from climate change would adversely affect their operations and prove a drain on productivity. However, only 26 per cent claimed to have put in place carbon emission reduction targets so far.

CDP chief executive Paul Dickinson said that the results represented something of a "mixed bag", but proved that global supply chains are increasingly aware of the risks and opportunities arising from climate change. "There is a sense from the respondents that climate change is now a material issue to them, it is just that not everyone is yet in a position to put together a credible response," he said.

He added that with the first wave of multinationals signed up to the Supply Chain Leadership Collaboration group having been recently joined by a raft of new firms, including Carrefour, Heinz, IBM, Merrill Lynch and Vodafone, pressure on suppliers to record and disclose carbon data is only going to increase. The second round of information requests are set to be sent out to over 1,000 firms and Dickinson insisted that more and more companies could expect to be asked to respond to such requests.

"These multinationals are going to continue to write to these suppliers year-on-year requesting this information and in the end they will have to come round," he said. "We're like the Mounties – we will get our man."