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Optimisation Strategies: Driving Supply Chain emissions reductions
Grace Hamer
CDP Supply Chain Project Officer
28th November 2018
Supply Chain Management Strategies Summit
Agenda
1. Impacts of supply chain emissions on businesses
2. How more & more companies are setting targets to reduce their SC emissions
3. Engaging suppliers to take them on a journey to emissions reduction
4. Results of collective impact
2
1. Impacts of supply chain emissions on businesses
2.How more & more companies are setting (science-based) targets to reduce their SC emissions
3.Engaging suppliers to take them on a journey to emissions reduction
4.Results of collective impact
3
“Delivering on the ambitions of the
Paris Agreement will require
businesses to play a key role to reduce
emissions, manage water resources
and limit deforestation within their
operations and their supply chains.”
Patricia Espinosa
Executive Secretary, United Nations
Framework
Convention on Climate Change
Source: CDP Data
Reducing supply chain emissions is critical to meet the Paris agreement
4
◼ Supply chain emissions
◼ Operational emissions
Retail
90%Average
75%
Supply chain emissions
Supply chain emissions are typically four times higher than a
company's direct emissions, and up to 90% in certain sectors.
#CDPSupplyChain | @CDP
Switching the focus from disclosure to performance
17%higher returns
over 5 years1
88% of reviewed
sources find that
companies with robust
sustainability practices
demonstrate better
operational
performance, which
ultimately translates
into cashflows.2
2.
https://arabesque.com/research/From_the_stockhold
er_to_the_stakeholder_web.pdf
1. Impacts of supply chain emissions on businesses
2.How more & more companies are setting (science-based) targets to reduce their SC emissions
3.Engaging suppliers to take them on a journey to emissions reduction
4.Results of collective impact
6
“GHG emissions reduction targets that are consistent with the level of decarbonization that, according to climate science, is required to keep
global temperature increase within 1.5 to 2ºC compared to pre-industrial
temperature levels”
Science based targets and CDP Supply Chain
#CDPSupplyChain | @CDP7
Targets include operational emissions but will include value chain (scope 3) emissions if they are > 40% of
total emissions.
For many companies this includes upstream emissions particularly for purchased goods and services.
Benefits of setting an SBT
Ultimately, the science brings meaning, and grounds
our ambition in reality: targets are no longer numbers
pulled from thin air, they are goals linked to a real
issue. Science-based targets commit us to what is
required, not just what is achievable. In this sense,
they prove leadership and provide the ‘spine’ of a
long-term sustainability strategy.
Tom Byrne, Energy Manager at Landsec
1. Impacts of supply chain emissions on businesses
2.How more & more companies are setting (science-based) targets to reduce their SC emissions
3.Engaging suppliers to take them on a journey to emissions reduction
4.Results of collective impact
9
CDP’s disclosure systemOne response. Multiple stakeholders
10
US$87trillion in assets
650 investors
US$3trillion+
purchasing power
115+ members
2018 supply chain members: 115+ companies with over US$3.3 trillion in combined
purchasing power, requesting over 11,500 suppliers
11 #CDPSupplyChain | @CDP
2018 Overall Responses
12
0 2000 4000 6000 8000 10000 12000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Number of suppliers asked/disclosed to CDP SC per year
Total suppliers who disclosed to CDP Total suppliers asked to respond
#CDPSupplyChain | @CDP
2018 Disclosure (CC, F, & W)
13
1000
1864
2415
2868
3395
3932
4313
4700
5562
0
1000
2000
3000
4000
5000
6000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Supplier Climate Change Disclosures
5562
229
660
826
987
1530
1714
0
200
400
600
800
1000
1200
1400
1600
1800
2013 2014 2015 2016 2017 2018
Supplier Water Disclosures
1714
88
305
0
50
100
150
200
250
300
350
2017 2018
Supplier Forests Disclosures
305
#CDPSupplyChain | @CDP
Moving suppliers from a state of low awareness and high risk, to active environmental
management and potential collaborative partners in future actions.
Taking suppliers and buyers on a journeyCase study
14
We recognize from our own
experience, that working to
reduce greenhouse gas
emissions can drive innovation
and enable cost savings...we are
asking suppliers to publicly report
their GHG emissions, reduction
strategy and actions to CDP. —
Walmart
Beginner
Unaware of climate
change (and impacts on
water and forests).
Potentially an unknown
business risk for your
company – reputational
or failure to deliver.
Unable to collaborate on
action to reduce impacts
Intermediate
Engaged on issues and
actively managing them
Ability to collaborate
Embedded in business
#CDPSupplyChain | @CDP
Typical member KPIsAssessing where suppliers are on their journey to a low carbon economy
15
Suppliers disclose
information via CDP
Calculate and report
emissions
Set an
emissions
reduction target
Report activities
to reduce
emissions
Collaborate with
customers to
reduce emissions
Phase 1: Establish foundation Phase 2: Build capacity Phase 3: Improve performance
Reduce emissions
and advance low-
carbon economy
Report purchasing
renewable electricity
Report
upstream
emissions and
supplier
engagement
activities
Typical member KPIsAssessing where suppliers are on their journey to a low carbon economy
16
Suppliers disclose
information via CDP
Calculate and
report emissions
Set an
emissions
reduction target
Report activities
to reduce
emissions Collaborate with
customers to
reduce emissions
Phase 1: Establish foundation Phase 2: Build capacity Phase 3: Improve performance
Reduce emissions
and advance low-
carbon economy
Report purchasing
renewable electricity
www.cdp.net | @CDP
Page 28
L'Oréal: Scorecards and buyer engagement
Engaging and training L’Oréal buyers has
made it possible to mobilize suppliers and
convince that measures aimed at reducing
greenhouse gas emissions play an
inevitable part of a company’s global
performance. CDP’s supply chain scoring is
then part of supplier’s evaluation.
Suppliers’ performance on climate change
is fully included in supplier relationship and
challenged during business reviews.
Miguel Castellanos, Director of
Global Safety, Health &
Environment, L’Oréal
Incomplete
response
scorecard
Complete
response
scorecard
Typical member KPIsAssessing where suppliers are on their journey to a low carbon economy
18
Suppliers disclose
information via CDP
Calculate and
report emissions
Set an
emissions
reduction target
Report activities
to reduce
emissions Collaborate with
customers to
reduce emissions
Phase 1: Establish foundation Phase 2: Build capacity Phase 3: Improve performance
Reduce emissions
and advance low-
carbon economy
Report purchasing
renewable electricity
HPE – Encouraging suppliers to set SBTs
19
This will have a ripple effect,
cascading up and down our value
chain, when customers use our
energy efficient technology that is
manufactured in factories with
science-based targets, they will cut
their own carbon emissions,
achieving exponentially more with
less environmental impact.
Lara Birkes
Vice president and chief
sustainability officer for HPE
Typical member KPIsAssessing where suppliers are on their journey to a low carbon economy
20
Suppliers disclose
information via CDP
Calculate and
report emissions
Set an
emissions
reduction target
Report activities
to reduce
emissions Collaborate with
customers to
reduce emissions
Phase 1: Establish foundation Phase 2: Build capacity Phase 3: Improve performance
Reduce emissions
and advance low-
carbon economy
Report purchasing
renewable electricity
Walmart - encouraging more action on emissions
21
BT - encouraging renewable energy purchasing
22
“How will we meet our new supply
chain target? Close cooperation with our
suppliers will be key. We will be
working together to help them switch
to renewable energy, and
encouraging more of them to report
to CDP. This is a critical first step
towards action for suppliers, and the
data they disclose will enable us to track
emissions reductions and uptake of
renewable energy in our supply chain”.
Gabrielle Ginér, Head of Sustainable
Business Policy at BT Group
We will reduce the carbon emissions Associated with our supply chain on 2016/17 levels by 29% by 2030
We will helpcustomers reduce
carbon by threetimes…
67.6%
6.7%
25.7%
3: 1We will help
customers reducecarbon by three
times…
…BT’s end-to-end carbon emissions
67.6%
6.7%
25.7%
Customer use and disposal of our products
BT’s end-to-endcarbon emissions
As at 31 March 2017
Typical member KPIsAssessing where suppliers are on their journey to a low carbon economy
23
Suppliers disclose
information via CDP
Calculate and report
emissions
Set an
emissions
reduction target
Report activities
to reduce
emissions
Collaborate with
customers to
reduce emissions
Phase 1: Establish foundation Phase 2: Build capacity Phase 3: Improve performance
Reduce emissions
and advance low-
carbon economy
Report purchasing
renewable electricity
Report
upstream
emissions and
supplier
engagement
activities
www.cdp.net | @CDP
Dell Inc. Integration into procurement standards
Dell’s guidelines for suppliers:
Report GHG emissions via CDP (minimum Scope 1 &
Scope 2 - Scope 3 encouraged)
Set public goals to reduce operational GHG impacts
Tier 1 suppliers to establish GHG management and
reporting requirements for their suppliers
Report on water via CDP Water
Publish a GRI-based sustainability report
Failure to meet these
requirements can
impact your supplier
ranking and potentially
diminish your ability
to compete for Dell's
business.
Dell
✓Page 27
Typical member KPIsAssessing where suppliers are on their journey to a low carbon economy
25
Suppliers disclose
information via CDP
Calculate and report
emissions
Set an
emissions
reduction target
Report activities
to reduce
emissions
Collaborate with
customers to
reduce emissions
Phase 1: Establish foundation Phase 2: Build capacity Phase 3: Improve performance
Reduce emissions
and advance low-
carbon economy
Report purchasing
renewable electricity
Report
upstream
emissions and
supplier
engagement
activities
1. Impacts of supply chain emissions on businesses
2.How more & more companies are setting (science-based) targets to reduce their SC emissions
3.Engaging suppliers to take them on a journey to emissions reduction
4.Results of collective impact
26
Percent of disclosers who have set
company-wide targets and goals
Company improvement over timeYear on year engagement demonstrates improvement
27
50% 60% 66%
First-time disclosers Second-time disclosers Third-time disclosers
Percent of disclosers who have
emissions reduction initiatives
38% 48%69%
Consumer Goods
Retailers
Driving action throughout the value chain
Manufacturing
base
28 #CDPSupplyChain | @CDP
By asking suppliers to disclose
information, companies are:
Reducing risk
Increasing efficiency by supporting
suppliers to identify cost savings
Increasing supply chain resilience
Fostering collaboration and stronger
partnerships
CDP’s Supply Chain ProgrammePotential for engagement
29
were cut by
suppliers in 2017
metric
tons of 551MCO2e
US$14B
This represents a
cost savings of
More than
Brazil’s
total emissions
in 2016
#CDPSupplyChain | @CDP
Collective impact
Forward-looking companies – such as the members of CDP’s supply chain program –also appreciate that successful, resilient suppliers are good for business. Suppliers that are better able to tackle sustainability challenges, such as climate change and water risk, are simply better business partners.
Christiana Figueres,
Executive Secretary of the UNFCCC
(2010 – 2016)
30#CDPSupplyChain | @CDP