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A necessary first step to supplier engagement on climate change is that a company’s suppliers must be able to measure, quantify, and report their greenhouse-gas emissions. Supplier engagement is on the rise—67% of responding suppliers reported both scope 1 and scope 2 emissions , and CDP saw an 86% increase in number of responses in 2011 compared to 2010 (1,864 from 1,000). However their carbon accounting is not yet at the level of their corporate customers, of whom 98% reported both scope 1 and 2 emissions in 2011. Overall performance among suppliers lags as well: while 43% of the CDP Supply Chain members have achieved reductions in their GHG emissions, only 28% of their suppliers have. This follows an established pattern. Just as large corporations have often developed better environmental practices in response to demand from retail consumers and investors, suppliers are now beginning to improve their own practices in response to demand from corporate clients.

Relative response rates among the suppliers in the CDP supply chain information request demonstrate this. Suppliers who received two or more requests—meaning that they had multiple corporate clients who sought their emissions information—were far more likely to respond. Only 35% of suppliers who received a single request responded, however, over 80% of suppliers with more than one customer request responded. This was especially true regarding Asian suppliers. Among responding suppliers, 45% of Asian companies received two or more requests, while only 37%, 31% and 28% of suppliers from Europe, North America and ROW, respectively, received two or more requests (Figure 6). Asian suppliers, who responded on

Supplier Performance

par with European suppliers and ahead of North American suppliers in terms of response rates and scores, may be outperforming expectations due to this apparent increase in business demand for emissions-related information.

In addition, the supplier scores reveal several interesting trends. First, performance scores trail disclosure scores overall, which is consistent with the broader trend, that reporting on corporate climate strategy and mitigation initiatives is outpacing actual performance. (For details on scoring methodology, please see “About the CDP Supply Chain program.”)

Regarding specific sectors, utility companies scored better on both disclosure and performance than companies in other industries, possibly due to the more heavily regulated nature of utilities. Companies in the consumer discretionary sector lag behind those from other sectors on both disclosure and performance.

“Our environmental sustainability commitments are playing an increasingly important role in how we’re winning business. A growing number of existing clients and prospects are asking sustainability questions and inquiring about the bank’s operations and what it’s doing to influence suppliers.”

Bank of America

Figure 6 – Suppliers who received information requests from multiple corporate clients were far more likely to respond.

One (N=3,480) 35%

Two (N=467) 80%

Three (N=133) 89%

Four or More (N=154) 89%

fig 6

Answered Questionnaire No Response

Declined to Participate 9 63% 17% 10% 1% 11% 6% 5% 2% 3%

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