FDBusiness.com

Research reveals climate change threat to global supply chain

 Breaking News
  • HKScan Strengthens its Meals Offering With Investment in Estonia HKScan, the leading Nordic food company, plans to invest in its Rakvere unit in Estonia. The €8 million investment will go towards modernising the unit’s frying department, including the expansion of the building and the installation of new cooking and packaging lines enabling implementation of new technologies and packaging solutions. Construction is to commence in [...]...
  • Food and Drink is at the Heart of the UK’s Largest Packaging Show Packaging Innovations, Empack and Label&Print returns to Birmingham’s NEC on 28 February-1 March 2018, and is set to be the most innovative show to date. With over 290 exhibitors already signed up, the UK’s largest annual event for the entire packaging supply chain will feature the latest industry innovations and technologies, alongside a major free-to-attend [...]...
  • AGRO Merchants Group Acquires Grocontinental AGRO Merchants Group, a global leader in cold storage and logistics solutions, announced today the acquisition of UK-based Grocontinental Limited. This transaction reinforces AGRO’s position as the leading cold storage and logistics provider in the United Kingdom and Ireland, deepens its commodity expertise, and substantially enhances its value-added service offerings for customers. David Grocott and Linda Grocott, third generation owners of [...]...
  • Trade Fair and More – The Event and Congress Programme For Anuga FoodTec 2018 Resource efficiency will be the primary focus of Anuga FoodTec 2018, the leading international supplier fair for the food and beverage industry, which will be held in Cologne, Germany from 20 to 23 March 2018. Around 1,700 suppliers from more than 50 countries will be presenting their new products for the production and packing of [...]...
  • TINE to Invest €77 Million in New Jarlsberg Plant in Ireland TINE, Norway’s largest farmer-owned dairy co-operative, is to invest €77 million in a dairy with the capacity to produce 20,000 tonnes of Jarlsberg cheese a year. The goal is to secure and strengthen Jarlsberg sales outside of Norway as export supports are phased out in 2020. This will make export of Jarlsberg from Norway unprofitable. “Jarlsberg [...]...

Research reveals climate change threat to global supply chain

January 16
10:25 2013

Seventy percent of companies believe that climate change has the potential to affect their revenue significantly, a risk which is intensified by a chasm between the sustainable business practices of multinational corporations and their suppliers, according to research published by the Carbon Disclosure Project (CDP) and Accenture.

“Reducing risk and driving business value” is based on information from 2,415 companies, including 2,363 suppliers and 52 major purchasing organisations who are CDP Supply Chain programme members. These members include Dell, L’Oreal and Walmart, and represent a combined spending power of around US$1 trillion. The research marks CDP’s most comprehensive annual update on the impact of climate change on corporate supply chains.

Climate change presents near-term risks to businesses, according to the report. Fifty-one percent of the risks that disclosing companies associate with drought or extreme rain are already having an adverse effect on company operations, or are expected to within five years, say those businesses. Additionally, the destructive nature of extreme weather is likely a catalyst for company action on climate change, with physical climate risk identified in the report as a greater driver of investment than climate policy. Of the 678 companies investing in emissions reduction initiatives, three-quarters (73%) say they feel that climate change presents a physical risk to their operations; just 13% identify regulation as a sole driver.

Most of the positive actions responding companies say they have taken in response to climate change are attributable to organisations that have been using CDP’s unique global system for at least two years, demonstrating that customer pressure is driving change. However, the report identifies a performance gap between companies and their suppliers and claims that this is intensifying climate risk in the global supply chain models.

Suppliers are significantly less prepared than their clients in responding to climate change, potentially threatening customer relationships and heightening supply chain vulnerability. Suppliers demonstrate a lower level of ambition to mitigate climate change risk, with just 38% setting emission reductions targets in comparison to 92% of purchasing companies. Similarly, at 27%, the percentage of suppliers investing in activities to reduce emissions is less than half that of CDP member companies (69%).

Unsurprisingly, CDP members are more likely to yield results from their environmentally sustainable business practices than suppliers, according to the survey. They are more than twice as likely to accomplish year-on-year emissions reductions (63% vs 29%) and are better positioned to capitalise on the financial benefits of carbon management. While 73% of members are achieving monetary savings, such as reduced energy costs from emission reductions activities, only 29% of suppliers are enjoying such returns.

Paul Simpson, CDP’s chief executive officer, says: “This research illuminates fragility in the global supply chain model. The marked difference in the sustainable actions of companies and their suppliers highlights a missed opportunity for suppliers to reduce energy costs and risks. The 61% of suppliers that failed to provide information through CDP are an even greater concern since they and their clients are unable to make a full assessment of the substantial climate risks or opportunities they face.”

The analysis of the information, processed through CDP’s unique global system for natural capital disclosure – now the largest and most comprehensive in the world – demonstrates the attractive returns that leading companies are enjoying from addressing supply chain sustainability. The 29% of suppliers that have reduced their emissions have saved some $13.7bn as a result. This implies aggregate potential savings of all 2,363 suppliers could reach three times that figure if the remaining proportion of suppliers were to achieve reductions at that rate.

“This report provides clear evidence that those who are most transparent about their climate change risks are more likely to achieve the greatest emissions reductions”, says Gary Hanifan, global sustainability lead for supply chain, Accenture. “And they are also more likely to enjoy monetary savings as a result of their responses to climate change risks. But the return on investment by the most proactive companies will not reach its full potential unless those companies can encourage their suppliers to follow their lead.”

The report is freely available from the CDP and Accenture websites (and can be dowloaded by clicking on the link below). It provides advice on how companies can use data, process and governance to create a more sustainable supply chain and capitalise on the correlations between climate risk, performance and accountability to realise financial benefit. The report also includes supplier scoring data provided by the CDP Supply Chain scoring partner FirstCarbon Solutions. Scores are available by region and sector and show that European and Asian companies are still outperforming companies in North America.

About Author

colin

colin

Related Articles



Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • January 8, 2018RAI Exhibition
  • January 16, 2018Sival Plant Production Trade Show
  • January 17, 2018Dutch Organic Trade Fair
  • January 17, 2018Anfas Food Product
AEC v1.0.4

Jobs: Logistics

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber





Subscribe Here



Advertisements