Retail powerhouses put microscope on supply chain emissions

10-Jul-2018 - Last updated on 10-Jul-2018 at 14:50 GMT

Companies spotlighting scope 3 supply chain emissions ©iStock

The world’s largest retailers, including Wal-Mart and Tesco, are increasing their focus on supply chain sustainability by collecting data from suppliers to reduce environmental risk and cut carbon emissions.

The latest data released by environmental non-profit CDP has revealed that 115 organisations, representing over US$3.3 trillion of spend, requested environmental data from more than 11,500 global suppliers this year. This represents more than 15% increase from last year, when 99 organisations requested data, noted CDP.

Sonya Bhonsle, head of Supply chain at CDP, said that emissions within the supply chain are on average around four times greater than those from a company’s direct operations – and rising to up to seven times greater for retailers and consumer-facing companies. “Large multinational corporations cannot comprehensively address their environmental impact without looking to their supply chains,” she stressed.

Cutting emissions… and costs

Bhonsle suggested that by leveraging data to understand their supply chains, corporations are able to boost innovation and cut costs as well as reduce their overall environmental footprint.

“Reductions equivalent to 551 million metric tonnes carbon dioxide – more than Brazil’s total emissions in 2016 – were reported by suppliers worldwide in 2017. This is equivalent to greenhouse gas emissions from just under 118 million passenger vehicles driven for one year, and is an increase from the 434 million metric tonnes reported in 2016,” she told FoodNavigator.

“Cost savings amounting to US$14 billion were reported as a result of these emissions reduction activities in 2017. However, it is likely that the full total, including unreported savings, significantly exceeds this sum – and this may only be the beginning.”

Growing engagement and science-based targets

According to CDP data, engagement in the supply chain is increasing, with 75% of companies in the organisations climate change analysis sample reporting emissions data for two or more named Scope 3 categories, such as goods purchased, transportation or waste disposal. This compares to 65% of companies reporting on indirect emissions in 2016.

“The rise in companies scrutinising their supply chains coincides with and is fuelled by growing momentum behind the take-up of science-based targets. These are goals that allow companies to reduce their emissions in line with the decarbonisation required to keep global temperature increase below two degrees Celsius, the central aim of the Paris Agreement. The Science Based Targets initiative (SBTi), which helps companies develop and approves such targets, requires companies to set supply chain (scope 3) targets if their scope 3 emissions account for at least 40% of their total emissions,” Bhonsle explained.

To date, over 400 companies have joined the SBTi, committing to reduce their greenhouse gas emissions in line with climate science. Over 100 of these companies already have targets approved by the initiative. Approximately 90% of these companies have scope 3 targets.

For example, through Walmart’s SBTi-approved Project Gigaton, it is working to reduce its emissions in its supply chain by one billion tonnes, between 2015 and 2030. Meanwhile, Tesco have a science-based target to reduce the emissions in its supply chain by 17% by 2030, against a baseline year of 2015. Kellogg Company have set a science-based target to halve its supply chain emissions by 2050.

Measurement, management and disclosure

This trend sees measuring, managing and disclosing environmental impact data becoming an increasingly important aspect of “standard business practice”, Bhonsle believes.

“Through the CDP supply chain program, global purchasing organisations are working to achieve sustainable supply chains and support the transition to a low-carbon economy and meet their science-based targets. They are engaging with thousands of their suppliers around the world to collect data on the critical business issues of climate change, water and forests.”

To this end, CDP carries out a supply chain questionnaire covering examining risk management, transparency and governance of climate change, deforestation and water security.
CDP then shares this data with purchasing organisations in a variety of formats, such as an interactive analytics dashboard; full data extract; excel outputs focusing on key performance indicators; summary PDF documents for use by buying teams; and a final end-of-year customised report identifying areas of strength and weakness.

“The purchasing organizations then use this data in variety of ways – for example, the primary GHG emissions data is integrated into their scope 3 inventory and used to create science-based emissions reduction targets. More widely, the data can be reviewed as part of a supplier's relationship with their customers, fed into risk assessments and used to identify areas of opportunity,” Bhonsle explained.

A suppliers overall performance can be interpreted, benchmarked and compared through CDP’s scoring system.