The failure of businesses to engage with suppliers to set emissions targets

Poor engagement from large businesses has left suppliers failing to establish sufficient emission targets, with only 38% of large corporates found to be connecting with suppliers over emission reduction and the wider climate crisis.

A recent study published by the Carbon Disclosure Project (CDP) acknowledged that 3% of suppliers to large corporations have science-based emissions targets in place, attributing the problem to poor engagement from their large corporate customers. For instance, CDP highlighted that just over a third of end-user businesses were engaging with suppliers on climate relating issues, with the majority failing to offer the crucial guidance required to set climate-based targets.

CDP is a non-profit organisation that provides global disclosure for businesses and investors to help minimise environmental impact. The study considered 200 CDP supply chain corporate members, collecting non-financial data from 23,487 suppliers, which was more than double the level received in 2020. The research showed that businesses failed to engage with suppliers in relation to emission reduction and other environmental issues such as water security and deforestation.

Despite a small increase in suppliers setting emission targets and becoming more climate aware, 56% of all suppliers admitted to having no climate-related targets in place. This is concerning with the CDP warning it could take more than a decade for suppliers to establish sufficient emission targets. Failure to effectively reduce emissions over the next decade could critically hinder the global effort to reduce temperature rise to below 1.5 degrees.

Sonya Bhonsle, CDP’s global head of value chains, admitted the data shows “corporate environmental ambition is still far from being ambitious enough”, stressing the problem is that large corporations remain focused on direct impacts rather than the wider indirect influence linked with the broader supply chain. This is highly significant as for many companies, greatest emissions and reduction opportunities lie outside their own operations, which is why Scope 3 reductions can be most effective.

The importance of suppliers in mitigating climate change was also emphasised by the study, with CDP reporting a 1.8bn tCO2e emission reduction from the 71% of suppliers who did report on Scope 1 and Scope 2 emissions. This reduction of emissions is equal to a year’s output of 454 coal power plants, not only helping to reduce environmental impact but benefiting both the suppliers and larger corporations equating to $29bn in financial savings.

If you would like to set targets to reduce your footprint over time, we can help you set a realistic and achievable target. You might also want to consider working towards a Science Based Target or a commitment to Net Zero. Get in touch with our experts on all call, 01756 749 951.