Supply chain collaboration improves sustainability and ROI
Collaborating with supply chain partners on sustainability initiatives can improve outcomes, including financial return and reduce a firm’s environmental footprint, according to a recent report by CDP and Accenture titled Supply Chain Sustainability Revealed: A Country Comparison.
The company responses to this year’s supply chain program paint a picture of the climate resilience of supply chains at the national level – and allows those countries to be compared with each other. Findings include:
–Japan is the only country with suppliers that are well-equipped to respond to climate risks as they are aware of climate risks and have taken steps to increase the resilience of their supply chains.
–Suppliers in France, the UK, Spain and Germany – in that order – are identified as the most sustainable as a result of having undertaken extensive measures despite low climate risk exposure in their supply chains.
–Suppliers in China, India, Italy and the United States are identified as vulnerable, due to an imbalance between the climate risk exposures they face and steps the suppliers have taken to make their supply chains more resilient. Even so, the United States has been identified as an incubator of leadership, given that the majority of constituents of the CDP Supplier Climate Performance Leadership Index – those suppliers identified as taking the most positive actions to address climate change – are headquartered in the United States.
–Suppliers in Brazil, Canada and India are identified as inactive. These suppliers are subject to fewer physical, regulatory and consumer-related climate risks and tend to less actively report emission reduction initiatives and mitigate water risks.
–A collaborative approach and profitable emissions reductions initiatives give China and India a competitive edge. Suppliers in China and India offer the best return on investment in terms of emissions reductions and monetary savings. Further, suppliers in both markets demonstrate the highest propensity to collaborate with partners across the value chain in order to reduce climate risk.
The global picture, which is presented alongside the country-by-country analysis in the report, establishes some encouraging signs of global progress. Today, more organizations than ever assess and report to CDP about their environmental impact. The 3,396 companies that took part in the program this year represent an increase of 40 percent in the past three years.
Further, the quantity and percentage of suppliers setting emissions targets, shows a steady upward trend: nearly half (48 percent) of the suppliers set targets last year, compared to 44 percent in 2013 and 39 percent in 2012. There has also been an increase in the number of suppliers achieving emissions reductions since 2012, with the percentage rising from 34 percent to 40 percent in 2014.
As suppliers become more advanced at carbon management, the number of companies realizing monetary savings from their actions to reduce emissions mirrors the rising trajectory, jumping from 29 percent in 2012 to 33 percent in 2014.
“What is concerning is that, despite the increase in the number of companies assessing and reporting on their emissions, the data suggests that suppliers are making either marginal or no improvements in their development of sustainable supply chains capable of weathering climate risks and other natural disasters,” said Gary Hanifan, managing director, Accenture Strategy. “The good news is that as companies transform their supply chains into digital supply networks they will gain greater end-to-end visibility, traceability and access to information to report on their compliance progress and mitigate climate risks.”
The report’s recommendations include:
–Major buyers need to step up the pressure on their suppliers, and be prepared to collaborate with them on sustainability initiatives.
–Suppliers should recognize the risk reduction, operational efficiencies and market differentiation offered by high sustainability performance.
–Digital technologies provide the means to turn sustainability performance into competitive advantage.