The Carbon Disclosure Project (CDP), a business consortium, has issued a report titled “Reducing Risk and Driving Business Value” which indicates that most respondents to its fifth annual request for information are driven to invest in emission reductions due to global supply chain risks from climate change and as a response to consumer trends. According to the report, which compiled the 2,415 responses received from 6,000 requests to project members and their suppliers, more than 70 percent of companies that have invested in emission reductions say they are driven by potential supply chain disruption rather than regulatory requirements.
In this regard, the report states, “Risk identification is one of the key factors that is spurring investments in emission reductions activities. Regulations do not appear to be the primary driver here, but rather concerns about business continuity based on a growing awareness of physical risks and customer demands. Of the total number of respondents investing in emission reductions, 73% say they feel that climate change represents a physical risk to their operations while just 13% identify regulation as a sole driver of risk.”
The report also found that suppliers were significantly less likely to be ready to address climate change than project member companies. The report states, “Supply chain sustainability is creating multiple forms of business value,” citing product and service innovation, premium pricing opportunities and improvements in company reputation. It concludes, “Supply chain innovators have an enormous opportunity to improve environmental sustainability on a global basis, while also increasing the value of their own companies.”