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As the recession drags on, climate change is in danger of slipping down the list of executive concerns. In fact, out of 634 suppliers recently surveyed by the Carbon Disclosure Project (CDP), only 58 percent felt that climate change posed a risk to their operations. A full third said it posed no risk at all.
The London-based CDP is a non-profit organization whose database of corporate climate-change information is drawn from annual surveys of 475 private companies, purchasing entities and government bodies. In all, more than 2,000 major corporations around the world report their greenhouse-gas emissions through the group. The latest CDP report, compiled by PricewaterhouseCoopers LLP, finds that between 40 and 60 percent of companies' total emissions are the result of supply chain activities such as processing, packaging and transportation. "It is therefore critical that senior management understand climate-change risks within their supply chains and how suppliers are managing those risks," CDP said.
Suppliers were asked to detail their carbon risks and opportunities, emissions, reduction plans, governance and product lifecycles. Some showed a significant awareness of climate-change impacts. Of the 77 respondents based in Asia, for example, 66 percent said the issue was a board-level responsibility, well above the global average of 54 percent. In addition, 39 percent of Asian-based companies said they use employee incentives as a key strategy for change. But the level of awareness wasn't uniform across Asia; higher numbers came from suppliers in Taiwan and Japan, while China and Thailand had less encouraging responses.
The procurement function must play a key role in developing more sustainable business practices, said Frances Way, head of supply chain with CDP. Companies need to be aware of the potential impact of extreme weather, water scarcity, regulation and general cost volatility, among other issues. Nevertheless, Way sees a pronounced lack f communication among many suppliers and their customers when it comes to global climate change. "Collaboration is vital if organizations are to future-proof their business," she said.
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