Going Green? Pros and cons

Supply chain companies are coming under increasing pressure to implement carbon management strategies, according to a Carbon Disclosure Project (CDP) Re...

Freddie Pierce
|Mar 10|magazine8 min read
Supply chain companies are coming under increasing pressure to implement carbon management strategies, according to a Carbon Disclosure Project (CDP) Report released last month. Some of the world’s biggest companies have already made carbon management a key part of their strategy, but those that have not already made efforts to go green may be putting future contracts at risk.

The second annual CDP Supply Chain Report, produced by A. T. Kearney, summarized climate change information from 710 suppliers. According to its results, 6 percent of leading companies already deselect suppliers who fail to manage carbon, and that is set to rise to 56 percent in the future.

Participating companies included big names from a range of industries, such as BAE Systems, Juniper Networks, and GlaxoSmithKline. If many of these corporations stipulate that suppliers are required to have a working carbon management program in place, it could be a turning point for supply chain companies — go green, or lose business.
However, there has been some reluctance to put sustainable solutions in place. A few firms in the sector have queried the business benefits of greening the supply chain. In a study by Keystone Distribution, ‘Chain Reactions’, 40 food service chains and another 40 food manufacturers underwent sustainability and environmental issues will come to the fore and all companies will be obliged to have policies.”

Some of the world’s biggest transport groups have already started optimizing the fuel efficiency of their fleet and are committing to reducing carbon output. UPS Airlines, the aviation division of the package delivery company UPS, operates the most modern and fuel efficient fleet in aviation. It recently committed to reducing carbon output by 20 percent by 2020.

First Group has also set itself a target for the year 2020 that will see emissions cut by 25 percent in its UK bus division, and a reduction of 20 percent in its rail operations. It published its Climate Change Strategy back in 2007. In general, it has been the high profile transport groups taking steps toward greening their operations in response to perceived consumer demand. Now it’s up to smaller supply chain organizations to follow suit. As Paul Dickinson, CEO of CDP, observes, carbon management is no longer “nice to have”, it’s becoming a “need to have”.

In a turning point for the global retail industry, Tesco opened the world’s first zero carbon supermarket in Cambridgeshire, in the UK. Built with sustainable wood, LED lighting and a combined heat and power plant powered with renewable fuel, the store has no net carbon footprint. Chief Executive, Terry Leahy, also reinforced the need for collaboration at the supermarket’s opening.

“We want to cut our own carbon footprint and help suppliers and customers do the same,” he said. “We’ll be a zero carbon business by 2050 but only by working with our suppliers and others across the industry.” How the rest of the supply chain reacts to calls for industry-wide carbon management and green policies is yet to be seen.

Supply Chain Digital will be keeping a close eye on what is turning out to be a contentious issue.