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Major Climate Threat to Global Supply Chains Identified by New Research from the Carbon Disclosure Project and Accenture



  Major Climate Threat to Global Supply Chains Identified by New Research from
  the Carbon Disclosure Project and Accenture

Business Wire

NEW YORK -- January 22, 2013

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

“Reducing risk and driving business value”  is based on information from 2,415
companies, including 2,363 suppliers and 52 major purchasing organizations who
are CDP Supply Chain program members. These members include Dell, L’Oreal and
Walmart, and they represent a combined spending power of US$1 trillion. The
research marks CDP Supply Chain’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
percent) say they feel that climate change presents a physical risk to their
operations; just 13 percent 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 organizations 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 it claims that this
is intensifying climate risk in the global supply chain models.

Suppliers are significantly less prepared than their clients to respond 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 percent setting emission reductions
targets in comparison to 92 percent of purchasing companies. Similarly, at 27
percent, the percentage of suppliers investing in activities to reduce
emissions is less than half that of CDP member companies (69 percent).

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 percent vs. 29 percent), and are better positioned to
capitalize on the financial benefits of carbon management. While 73 percent of
members are achieving monetary savings, such as reduced energy costs from
emission reductions activities, only 29 percent 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 percent 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 percent 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. It
provides advice on how companies can use data, process and governance to
create a more sustainable supply chain and capitalize on the correlations
between climate risk, performance and accountability to realize 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 still outperform
companies in North America.

About CDP

The Carbon Disclosure Project (CDP) is an international, not-for-profit
organization providing the only global system for companies and cities to
measure, disclose, manage and share vital environmental information. CDP works
with market forces, including 655 institutional investors with assets of US$78
trillion, to motivate companies to disclose their impacts on the environment
and natural resources and take action to reduce them. CDP now holds the
largest collection globally of primary climate change and water information
and puts these insights at the heart of strategic business, investment and
policy decisions. Please visit www.cdproject.net to find out more.

CDP Supply Chain member companies

Accenture, Acer Inc., Amdocs Ltd., AT&T Inc., Banco Bradesco S/A, Bank of
America, Braskem S/A, British Sky Broadcasting, BT Group, City of Denver,
Colgate Palmolive Company, Dell Inc., Diageo Plc., Domtar Inc., EADS N.V.,
Eaton Corporation, Eletropaulo Metropolitana Eletricidade de São Paulo S/A,
Elopak, Endesa, Eni SpA, FIBRIA Celulose, Ford Motor Company, Goldman Sachs
Group, Groupe Steria, Imperial Tobacco Group, Jaguar Land Rover Ltd, Johnson &
Johnson, Johnson Controls, JT International SA, Juniper Networks, KAO
Corporation, Kimberly-Clark Corporation, KPMG UK, L’Oreal, Marfrig Alimentos,
MetLife, Inc., Microsoft Corporation, National Australia Bank, National Grid,
Nestle, Nokia-Siemens Networks, PepsiCo, Philips Electronics N.V., Reckitt
Benckiser, Rexam, S.C. Johnson & Son, Inc., SAB Miller, Starwood Hotels &
Resorts Worldwide, Inc., Suzano Pulp and Paper, The Coca-Cola Company,
Unilever, Vale, Vodafone Group, Walmart.

About Accenture

Accenture is a global management consulting, technology services and
outsourcing company, with 259,000 people serving clients in more than 120
countries. Combining unparalleled experience, comprehensive capabilities
across all industries and business functions, and extensive research on the
world’s most successful companies, Accenture collaborates with clients to help
them become high-performance businesses and governments. The company generated
net revenues of US $27.9 billion for the fiscal year ended Aug. 31, 2012. Its
home page is www.accenture.com.

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Contact:

CDP
Catherine von Altheer, + 44 20 7970 5682
+ 44 7794 430962 (Mobile)
catherine.vonaltheer@cdproject.net
or
Accenture
Barbara Lyon, + 703-947-1838
barbara.d.lyon@accenture.com
or
Gareth Cater, + 44 203 335 0772
g.cater@accenture.com
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