Procurement teams are being called on to ask suppliers to disclose their environmental data through the CDP (Carbon Disclosure Project) platform.
The organisation collects data on carbon emissions and other environmental impacts from a range of multinationals and local governments, which it says helps to drive sustainable supply chains, influencing US$3.6 trillion in annual procurement spend.
However, Sonya Bhonsle, global head of supply chain at the CDP, said: “In terms of scale, we collected information from 8,400 companies in total and almost 7,000 of these were disclosing at the request of their customers – 125 major buyers that work with CDP to manage their supply chains. The good news is that more and more companies are taking action to measure and report their emissions to us. But we approached 13,000 companies to disclose. Everyone has to play a role.”
Speaking at the Climate Action for Corporate Travel Urgent Sustainability Summit (CACTUS), Bhonsle, who has worked with buyers for 15 years, said because there was an “actual business risk around climate change” with temperature fluctuations affecting many sectors and industries, investors were seeking more information on how companies are reacting to the crisis.
“In the supply chain, a lot of our risks and opportunities are outside our control. We need to go through the same processes as investors,” she said. “These companies that we buy from, what are their emissions, how can we track their progress? What isn’t happening is that a lot of private companies, or smaller companies, are not signing up. Smaller companies play a material role, they listen to the buyers. When buyers ask questions, suppliers take action. Procurement teams can have so much impact.”
As a result, when buyers ask suppliers to disclose carbon emissions to CDP, the companies then, very often, begin to benchmark their emissions for the first time, according to Bhonsle. “They look and see what they can do to reduce these emissions, and then they hopefully set a target. The role that you can play is incredible, by just asking the questions of companies,” she added.
“Think about what drives anything in your company. It’s usually your investors and your customers. Ask the companies you purchase from to measure their emissions, report their emissions, and reduce their emissions. When buyers ask questions, suppliers take action.”
Meanwhile, she talked about the role of technology in travel programmes. “If you can do video conferencing, then you should do that,” Bhonsle suggested. “But most buyers get that message already. The second thing you can do is switch suppliers, you can switch from air to rail.
“But when it comes to business travel, you still have to fly. So when you have to purchase these flights, or hotel rooms, what can you do to influence the suppliers you purchase from? Ask questions.”
She cited one international hotel group as one travel sector company that was disclosing its emissions to CDP - and that it too was requesting suppliers it worked with the to follow suit. “As part of their onboarding, if you wanted to be a supplier to them, they put in a singular question: ‘Do you respond to CDP, and if so what were your emissions last year?’.
“Within a week, our New York office had 16 calls, asking who [CDP] was, and how do they answer yes [to the question]. What did they need to do? Nobody wanted to say no. It wasn’t even a weighted question, you’re just onboarding to get on to the platform.
“So when you ask a question, it raises it in the company. Do they want to say no, especially when their counterparts are saying yes?”
Clear route
Elsewhere, another client integrated environmental assessments for its suppliers.
“L'Oreal sits down with their main suppliers quarterly, at a senior level, and they have discussions about quality, price, and once a year climate change is on the agenda. They will tell them they’ve set a roadmap, and science-based targets. So set a clear route with suppliers, and track their progress,” she said.
“Some companies also build it into their score cards, so there are environmental KPIs. Normally it’s weighted at 5%.”
Bhonsle also advised travel buyers to make it as easy as possible for their suppliers, saying if hotel groups say they aren’t able to provide information, buyers should provide real examples of how other hospitality chains, such as Hilton - another CDP discloser - do so.
Supplier awards were also a way to encourage carbon emissions to be discussed, with Bhonsle noting: “It is impactful, even having a conversation. Working together can really drive action.”
More than 60 delegates heard a series of presentations from organisations including Microsoft, World Wide Fund for Nature (WWF), SkyNRG and the Cambridge Institute for Sustainability Leadership at the summit, which was held at Barclays Bank’s HQ in London’s Canary Wharf earlier this month.
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