optimisation strategies: driving supply chain emissions

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


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





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





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


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


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


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


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


Reduce emissions

and advance low-

carbon economy

Report purchasing


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

http://www.cdp.net/


18

Suppliers disclose

information via CDP

Calculate and

report emissions

Set an

emissions

reduction target

Report activities

to reduce


customers to

reduce emissions


Reduce emissions

and advance low-

carbon economy

Report purchasing


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


20

Suppliers disclose

information via CDP

Calculate and

report emissions

Set an

emissions

reduction target

Report activities

to reduce


customers to

reduce emissions


Reduce emissions

and advance low-

carbon economy

Report purchasing


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


23

Suppliers disclose

information via CDP


emissions

Set an

emissions

reduction target

Report activities

to reduce

emissions

Collaborate with

customers to

reduce emissions


Reduce emissions

and advance low-

carbon economy

Report purchasing


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

http://www.cdp.net/


25

Suppliers disclose

information via CDP


emissions

Set an

emissions

reduction target

Report activities

to reduce

emissions

Collaborate with

customers to

reduce emissions


Reduce emissions

and advance low-

carbon economy

Report purchasing


Report

upstream

emissions and

supplier

engagement

activities





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


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

optimisation strategies: driving supply chain emissions

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