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Global companies benefit from 'greening' supply chains

Organisations in both the US and Europe are benefitting commercially from "greening" their supply chains, experts report.

According to The Carbon Disclosure Project 2011 Supply Chain Report, produced by management consulting firm A.T. Kearney, global businesses are now seeing real returns on investment from incorporating sustainable practices into procurement functions.

The report, which looks at climate change actions and performance of 57 of the leading global companies and 1,000 of their suppliers across a broad cross-section of industries, highlights an emerging trend in supply chain engagement and collaboration. It reports that more than 50% of large businesses and 25% of their suppliers have seen cost savings as a result of carbon management activities.

"Eighty-six percent of companies saw commercial benefits from working closely with suppliers to improve performance and mutual return on investment, up from 46% in 2009. This jump is evidence of how sustainable procurement practices are addressing climate change and could have major impact on the supply chain, which for most companies accounts for at least 50% of carbon emissions," A.T. Kearney stated.

The research cited PepsiCo, which has uncovered more than $60m 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 and proprietary energy assessment tool.

"With a robust strategy and proven benchmarks in place, PepsiCo set out to engage and educate suppliers about potential opportunities to innovate their own operations," Walter Todd, vice-president of Operations, PepsiCo UK & Ireland told A.T Kearney.

"By providing suppliers access to the same energy assessment tools we use in our own operations, we've seen mutual return on investment."

The research shows that more than 79% of CDP Supply Chain member businesses now employing a formal climate change strategy (up from 63 %in 2009), there has been a parallel shift in the key business drivers for action within the supply chain, affecting how large organizations and their suppliers engage and implement carbon management processes.

Daniel Mahler, A.T. Kearney partner and study co-leader added: "Forward looking corporate executives are realising that the implementation of carbon emission reduction programs deliver significant economic and strategic benefits for their organizations. Close collaboration with suppliers on these efforts multiplies the benefits."