Explaining the Levers for Supplier Engagement
1. Reducing the external demand for carbon
Members’ knowledge of sustainable options in areas such as travel, office supplies and construction is increasing to manage demand. For instance, videoconferencing is reducing travel-related CO2 emissions, and the purchase of energy efficient IT is reducing carbon emissions.
2. Using carbon management criteria to select suppliers When competition can be leveraged, some members are willing to deselect suppliers based on sustainability criteria. However, this number is still relatively low. Within five years, however, the majority of members will be willing to do this if they have the assurance that the data they have is accurate and comparable (Figure 13).
3. Jointly improving carbon performance with suppliers for tangible results
Members who seek a joint advantage with suppliers are achieving tangible results. This year, 86% of members worked closely together with their suppliers to jointly improve performance, up from 46% in 2009 (Figure 14).
These members are sharing their own best practices with suppliers and are providing a program around implementation. This ensures joint benefits, and makes clear to suppliers what is in it for them. At the same time, members are also encouraging suppliers to broaden their scope and to engage with their suppliers as well.
4. Re-designing products to reduce carbon impact Where the supplier power is high, product redesign in an end-to-end life cycle approach will change the playing field. A.T. Kearney research confirms that up to 80% of a company’s overall emissions are in the supply chain. Over half of these emissions are actually generated at the use and disposal of products. Members are already developing – often with their suppliers – new product innovations to reduce emissions along the entire product life cycle. Examples include low temperature washing powder, easy to rinse shampoo and energy efficient electronic devices.
2009 Today
6%
Figure 13 – Member willingness to deselect suppliers for failing to meet carbon management criteria
2009 Today
6%
2010 12%
2009 Within 5 years
56% 2010 56%
fig 13 2009
Yes No or did not respond 44% 44% 94% 88%
2010 12%
2009 Within 5 years
56% 2010 56% fig 13
Global 1,000 32%
3.5%
Figure 14 – Members having a collaborative process in place to jointly improve performance
Asia 181 40%
3.2% 2009 46% 2010 86% Do this today fig 14
Will do this within 12 months 3.7%
2009 - supplier participation 1,402 fig 19
Europe 386 36%
3.6% 14%
North America 368 28%
72% 54% 44%
60% 73%
64%
Total 1,000 32%
3.5%
Financials 28 46%
11
North America 368 28%
3.7% fig 19
This supplier engagement approach is causing a chain reaction. Members are making suppliers aware of their carbon emissions while enforcing their emissions reduction goals. If this chain reaction in carbon management capability improvement continues annually, total emissions will eventually be reduced.
94% 88%
“We are still in the process of evaluating the data we receive from our suppliers through the CDP request. Since it is hard to compare companies, an industry- specific overview would be a good start to put the data into perspective.”
National Grid
“As we make use of non-financial sustainability data to evaluate the performance of our suppliers and mitigate areas of risk in our supply chain it is important that the underlying data carries with it a level of accuracy on par with financial data.”
Global 1,000 32%
PepsiCo 3.5%
Asia 181 40%
3.2% 44%
68% 73%
Europe 386 36%
3.6%
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