Global Supply Chain Report 2021

A small but growing group of CDP Supply Chain members and SER leaders are trailblazing a path to truly meaningful environmental action – but they are in the minority. Companies across the entire supply chain must act now to achieve the speed and scale required to avert a cascade of irreversible environmental crises.

A small but growing group of companies are trailblazing a path to truly meaningful environmental action, but they are in the minority

CDP Supply Chain members, over 200 major companies representing US$5.5 trillion in procurement spend, requested 23,487 suppliers to disclose in 2021. The responding suppliers reported that engagement from these members drove 231 million tons of emissions reduction initiatives.

However, most companies are not engaging with their suppliers on climate change, water security, and deforestation.

Only 38% of companies who disclosed in 2021 engage with suppliers on climate change. This drops even further to 16% when looking at water security. Just 47% of downstream companies (traders, manufacturers, retailers) are working beyond their first-tier suppliers to manage and mitigate deforestation risks.

Suppliers focus predominantly on assessing the impact of their operations and not the indirect impacts of their own supply chain

In 2021, 71% of companies reported their Scope 1 and 2 emissions, while only 20% reported on emissions associated with products and goods they purchase (Scope 3).

68% of suppliers disclosed production and consumption data for palm oil and 60% disclosed water consumption data.

As Scope 3 emissions are, on average, over 11 times higher than operational emissions – suppliers must urgently cascade climate action down their supply chains.

Global warming and environmental changes have the potential to permanently degrade human and natural habitats and create a more unstable world. We cannot address these challenges alone. At L’Oréal, alongside our own sustainable commitments, we are committed to actively supporting our business partners to improve their social and environmental performance and have made participation to CDP mandatory for all our strategic suppliers. We want to inspire others to act, and be a catalyst of change in the beauty sector and beyond. Nicolas Hieronimus, CEO, L’Oréal

Corporate ambition is lacking

Two years into the Decade of Action, only 44% reported any climate-related targets and just 2.5% (1 in every 40) of these targets were approved science-based targets.

The number of suppliers setting any climate targets increased on average 5% per year. At the current pace, it would take at least another decade for the remaining 56% of suppliers to set any climate targets – let alone science-based ones.

The Earth is finite and only has so much carrying capacity for greenhouse gas emissions. It’s crucial for companies to set science-based targets that align with what’s needed to avoid the most devastating impacts of climate change.- Stanley Black & Decker

Good intentions must translate into long-term 1.5°C aligned transformational action

In 2021, suppliers reported reducing their emissions by 1.8 billion tCO2e, (equivalent to emissions from 454 coal power plants running for a year), resulting in savings of over US$29 billion.

However, only 28% of companies reported having a low-carbon transition plan in place to meet their climate goals.

CDP Supply Chain membership allows us to gain better insights into our Scope 3 emissions and highlights opportunities to engage with our suppliers to reduce emissions across the value chain. Together with our suppliers, we want to build a strong foundation and scale impact to achieve results.- AstraZeneca

Companies must drive action down the supply chain and into business-as-usual to speed and scale up the rate of transformation

To help companies kickstart this crucial, urgent process, CDP has developed the ‘Sustainable Procurement Pathway’. This scalable framework covers key aspects of a sustainable procurement strategy to achieve a consistent reduction of environmental impacts across the value chain.

There is also a growing trend of buyers wanting to understand the Scope 3 impact at a product level during the procurement process, but suppliers are struggling to provide that information.

CDP has partnered with BCG to develop a product lifecycle platform that enables companies to effectively collaborate and share their product-level sustainability data, driving transparency and accelerating climate action at scale through accurate measurement of Scope 3 emissions.

Source: CDP