The Countdown to Disclosure Begins: The CDP’s Supply Chain Program

By Amy Haddon, Renewable Choice Energy

The Carbon Disclosure Project (CDP) is the largest database of self-reported corporate climate change information in the world.  The CDP’s mission is to work with businesses, non-profit organizations, and municipalities to create long-term prosperity that preserves, rather than destroys, the natural world.

Fundamentally, the CDP allows companies and cities to measure, manage, and disclose their environmental information, creating greater transparency while simultaneously responding to the demands of stakeholders.  Organizations around the globe have chosen to report to the CDP helping them minimize risk, expose opportunities, and satisfy investors.

On April 1, the CDP officially launched the 2012 reporting period for their Supply Chain Program.  More than 50 purchasing organizations including Dell, PepsiCo, and Walmart are currently using the CDP reporting platform to affect change within their supply chains.  Suppliers from around the world are now being asked to voluntarily disclose their sustainability criteria and carbon emissions by responding to the CDP at the behest of their buyer.

The Supply Chain Program has led to a 20% increase each year for the last two years of organizations reporting to the CDP.  The Program is used by large buyers as a platform to gather and analyze supply chain sustainability information and potential risks.  The Supply Chain Program has seen an increase in supplier submissions of more than 85% since 2010.

Pressure from purchasing organizations is a major driver behind this increase.  Buyers are looking for a methodical way to reach out to their suppliers in order to better understand how they are addressing sustainability and working to reduce greenhouse gas (GHG) emissions.  These large purchasers are turning up the heat by requiring more suppliers to respond to the CDP and becoming willing to deselect suppliers than won’t.  In 2011, there was a 128% increase in the number of suppliers that receive a formal request from their purchasing organization to report to the CDP.

It behooves suppliers to comply with these requests.  Not only do suppliers satisfy the demands of their buyers, but they will also receive a Disclosure Score from the CDP.  The Disclosure Score evaluates both the depth and breadth of the company’s response in several areas including measurement of carbon emissions, communications about climate-related behavior, and third-party verification.  Specific scores reflect the levels of experience and/or commitments to emissions reduction and disclosure that a company has made.

The Score is an important benchmarking metric for reporting companies and other stakeholders and may be viewed by purchasing organizations.  It is therefore imperative that suppliers submit a high quality response to the CDP that nets them the highest Disclosure Score possible.

Companies choosing to report to the CDP can realize additional benefits by measuring and managing their GHG emissions as part of their disclosure process.  By tracking GHG emissions, companies have been able to realize significant bottom line impact as a result of identifying and implementing reduction targets and eliminating inefficiencies.  In 2011, the CDP reported that more than 60% of supplier respondents described activities to reduce emissions and that 40% of those reported real cost savings as a result.

In addition to the Disclosure Score, reporting companies also receive benchmarking analytics from the CDP that includes a categorical breakdown of the score.  These analytics provide a quantitative baseline as a springboard for future measurement, management, and sustainability development.

The advent of carbon accounting software systems like Mosaic™ is making GHG inventory and energy tracking easier than ever by simplifying the process of measuring and reporting emissions.  In 2011, the CDP reported that 80% of all supplier respondents disclosed their Scope 1 and Scope 2 emissions, a 33% increase from 2010.

It’s become increasingly important for suppliers to answer their purchasing organization’s request to report to the CDP. The universal reporting portal provided by CDP and innovative tools and analytics of programs like Mosaic make it advantageous for companies of all sizes to do so.

About Renewable Choice
Founded in 2001, Colorado-based Renewable Choice Energy is a leading global provider of greenhouse gas measurement services, energy efficiency solutions, renewable energy credits (RECs), and carbon offsets. Renewable Choice works with Fortune 500 Companies, educational institutions, small businesses, and residential customers, and has worked on over 3,500 LEED® green building projects. Renewable Choice and its clients have received prestigious awards from the EPA and DOE for supporting and expanding the renewable energy market and have been featured in hundreds of media outlets including The New York Times, Wall Street Journal, CNN, USA TODAY, and more. An official, accredited consultancy partner to the CDP, Renewable Choice has helped hundreds of suppliers respond to the transparency demands of their buyers.  To learn more, visit http://www.renewablechoice.com.

Photo Credit: Some Rights Reserved by atelier PRO via Flickr.

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