Climate: Supply chains among the biggest polluter culprits

A company’s supply chain generates 11.4 times more greenhouse gas emissions than its direct activities, making it the biggest culprit for lasting climate damage, according to a new report published on February 10.

The report, entitled, “Engaging the Chain: Driving Speed and Scale,” by the Carbon Disclosure Project (CDP) in collaboration with the Boston Consulting Group (BCG), states that companies have a serious problem measuring scope 3 – indirect emissions related to their subcontractors.

The study surveyed 11,457 suppliers from 200 member companies. The participants were asked a series of questions about climate change, forest protection, and water security.

In order for companies to set time-bound, ambitious goals to reduce their environmental impacts, they must accurately determine their environmental impacts.

The fact that only 2.5% of reporting suppliers have approved scientific targets two years after the ” Decade of Action ” began is sparking concerns among climate advocates.

An analysis of the CDP supply chain report published today reveals that more than half of the companies (56%) do not have climate objectives.

In addition, only 28% of companies had developed a plan to achieve low-carbon transition.

BCG, co-writers of the report, highlights the urgent need for companies to measure and cascade across the supply chain to avoid an environmental crisis.

“Data shows that corporate environmental ambition is still far from ambitious enough. Along with this, companies have blinkers when it comes to assessing their indirect impacts and engaging with suppliers to reduce them,” says Sonya Bhonsle, Global Head of Value Chains & Regional Director Corporations at CDP.

“Companies must act urgently to cascade action and manage environmental impacts throughout their supply chains to increase the level of action to ensure a 1.5°C future. This is essential for the transition to a net-zero, deforestation-free, and water-secure sustainable economy,” Bhonsle further stated in a press release.

However, the situation remains hopeful as there have been significant gains made in reporting and addressing direct environmental impacts.

The report states that 71% of suppliers reported their scope 1 and 2 emissions in 2021. As a result, the firms used less coal and saved $29 billion while reducing their emissions by 1.8 billion tons of carbon dioxide, which is equivalent to 454 coal-fired power plants operating for a year.

Water consumption data was provided by 60% of suppliers, and palm oil production and consumption data were provided by 68%.

According to Nicolas Hieronimus, CEO of L’Oréal, in the report “Global warming and environmental change have the potential to permanently degrade human and natural habitats and create a more unstable world.”