In 2021 – two years into the United Nations' Decade of Action – only 2.5% of reporting suppliers have approved science-based targets, according to CDP. The organization’s latest supply chain report finds that more than half of suppliers (56%) did not have any climate targets at all. Additionally, only 28% of companies report having a low-carbon transition plan in place to meet their climate goals. CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions.
The number of suppliers setting any climate targets increased on average 5% per year. By extrapolating this trend to the 56% of suppliers that do not have any climate targets, CDP finds that at the current pace, at least another decade is required to ensure that all suppliers reporting in 2021 set any climate target, let alone a science-based target. CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions.
Corporate ambition is also lacking when it comes to cascading measurement and action down the supply chain, according to CDP. Companies are “insufficiently” tracking Scope 3 emissions, despite value chain emissions being more than 11 times greater than emissions resulting from their own operations. Only 38% of disclosing companies reportedly engage with their suppliers on climate change, and this drops even further to 16% for water security. Just 47% of downstream companies – traders, manufacturers and retailers – are working beyond their first-tier suppliers to manage and mitigate deforestation risks.
CDP’s new supply chain report, “Engaging the chain: driving speed and scale,” analyzes environmental data disclosed through CDP in 2021 from 11,400+ corporate suppliers. The report, written in collaboration with Boston Consulting Group (BCG), highlights the urgent need for companies to cascade measurement and action down the entire supply chain, to achieve the speed and scale required to avert environmental crisis, according to the company.
Sonya Bhonsle, global head of value chains and regional director corporations at CDP, says, “Our data shows that corporate environmental ambition is still far from being ambitious enough. Alongside that, companies have blinkers on when it comes to assessing their indirect impacts and engaging with suppliers to reduce them. Companies must act urgently to cascade action and manage environmental impacts throughout their supply chains to scale the level of action to secure a 1.5°C future. This is essential for the transition towards a sustainable net-zero, deforestation-free and water- secure economy.”
There is progress being made when it comes to reporting and taking action on direct environmental impacts. In 2021, 71% of suppliers reported their Scope 1 and 2 emissions. Suppliers also report reducing their emissions by 1.8 billion tCO2e (equivalent to emissions from 454 coal power plants running for a year), resulting in savings of $29 billion. Sixty percent of suppliers disclosed water consumption data and 68% disclosed production and consumption data for palm oil.
For more information, visit: www.cdp.net
