Greening the Supply Chain – Carbon Emission Reduction Leads to Cost Savings

The Carbon Disclosure Project (CDP), a not-for-profit organisation that gathers data on how companies act to prevent dangerous climate change, has launched the 2011 CDP Supply Chain Report, is produced by management consulting firm AT Kearney, which looks at climate change actions among 1,000 suppliers to 57 leading global companies, among them many with operations here in Ireland.

The Supply Chain Report found that businesses are now seeing a return on investment from embedding sustainable practices into the procurement function. More than 50% of the large businesses and 25% of their suppliers have seen direct cost savings as a result of their carbon management activities.

PepsiCo, for example, has uncovered more than $60 million in energy savings opportunities and a 16% reduction in per-unit energy use across its beverage plants, as a result of its carbon management strategy.

Richard Evens, president of PepsiCo UK and Ireland, says: “I think that successful businesses in the 21st Century will be those that decouple growth from increasing carbon emissions. PepsiCo is working with suppliers all over the world who are flexible and innovative and share our commitment to sustainable growth. The CDP Supply Chain Programme is helping us to turn that commitment into action by highlighting the importance of this agenda to our people, helping them to understand their own impact and to find how we can work together to deliver bigger carbon reductions.” Some of PepsiCo’s products for the UK and Irish markets are pictured.

Highlights from the 2011 CDP Supply Chain Report include:

* 86% of companies saw tangible commercial benefits from working closely with suppliers to improve performance and mutual return on investment, up from 46% in 2009

* 79% of CDP Supply Chain member businesses now employ a formal climate change strategy, up from 63% in 2009

* More than 50% of large businesses and 25% of their suppliers have seen cost savings as a result of carbon management activities

* 45% of businesses track and report supply chain emissions, more than double of that in 2009

* 72% of large businesses have their data verified externally.

“This report underlines the benefit companies can derive from measuring and tackling carbon emissions,” says Dick Budden, Ireland director of CDP. “Not only large corporations, but their suppliers too, can see the benefit to be derived from embedding climate change policies.”

Daniel Mahler, AT Kearney partner and study co-leader, remarks: “Forward-looking organisations are realising that the implementation of carbon emission reduction programmes deliver significant economic and strategic benefits for their organisations.”

Participating large companies with operations in Ireland include: Accenture, Dell, Endesa, Google, Hewlett Packard, IBM, Merck, PepsiCo, Unilever and Vodafone. CDP Ireland is principally supported by the NTR Foundation.

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