The Green Room

An unexpected partnership is changing business behavior

By Keith Littlejohns on March 8, 2012 2 comments

In 2007, few companies were talking about sustainable supply chains. This is puzzling considering that the business case for wasting less is not new, and the concept of supply chain management has been around for decades. Both these elements can go a long way toward making a company’s supply of goods more sustainable.

The main aim of supply chain management is to meet the demand of the customer through the most efficient use of resources. In other words, eliminating waste so that customers are more satisfied (or perhaps Living Better).

The very idea of wasting our planet’s resources has always bothered me. Fortunately, my role allows me to tackle the issue head on—I work at the ‘most powerful green NGO you’ve never heard of’, aka the Carbon Disclosure Project (CDP).

CDP is a global organization that works to drive greenhouse gas emissions reduction and sustainable water use by companies globally.  We harness the power of the shareholder to encourage companies to measure the amount of greenhouse gases they emit while doing business and the risks they confront from climate change.

Each year, on behalf of hundreds of institutional investors, CDP sends companies a questionnaire that acts as a thought-provoking exercise, often resulting in efficiency improvements. For example, take energy use: simply measuring what you consume helps you better manage what you use. We’ve spent 10 years working with the investor community and the corporations they sustain in order to make sure the questions we ask are the right ones. The impact has been significant.

Walmart opted to answer the CDP questions for the first time in 2006. In doing so, they discovered that the refrigerants used in grocery stores accounted for a larger percentage of Walmart’s greenhouse gas footprint than its truck fleet, and were therefore able to put in place new strategies to address the issue.

They then realized the potential benefit of their suppliers disclosing to CDP as well. Since 2008, CDP has been sending its unique set of questions to Walmart’s suppliers on their behalf and the model has been a great success.

Walmart’s procurement teams are now able to use the information gathered through CDP to identify carbon hotspots in their supply chain, and areas for improvement in energy efficiency. Other companies are also waking up to the benefits that this information can provide in helping create a sustainable supply chain: Dell recently stated that “The questions go beyond the quantitative to include valuable information on the risks and opportunities from climate change. It is this information that drives strategic thinking about business impacts.” Today, CDP requests information from thousands of suppliers on behalf of 50 global corporations (including Dell, PepsiCo, and Bank of America).

This means that as I write this, companies all over the world are changing their behavior as a result of being asked the right questions. They are now analyzing their business practices as they relate to climate change and collecting vital information that can help improve their efficiency, reduce costs, and most importantly, prevent the superfluous burning of fossil fuels that would have otherwise gone unnoticed.

After disclosing to CDP for the first time in 2011, one apparel supplier stated that “the program has positively affected the organization. [Supplier] has experienced a wealth of knowledge and benefits by going through this process.”

It is truly exciting to watch companies of all shapes and sizes discover efficiencies that improve the bottom line with less impact on the planet. Last year, more than 500 of Walmart’s suppliers measured and reported their greenhouse gas emissions to CDP for the first time, and 300 companies reported initiatives to reduce their emissions. Reducing supply chain emissions is important to Walmart, and our partnership helps highlight supplier collaboration opportunities to achieve this.

CDP’s ability to standardize the model that Walmart pioneered has catalyzed a global web of interconnected companies, continuously innovating to provide better value to their customers. This is a subject that Walmart takes seriously, and CDP is helping Walmart’s suppliers find new business opportunities while reducing their impact on our planet.

Ultimately, this partnership is making an extraordinary difference. By paving the way for a replicable supplier-engagement model that can improve supply chain performance, Walmart and CDP are making strides to ensure that companies worldwide are pursuing sustainable supply chains and changing business behavior in the process.

To learn more about the Carbon Disclosure Project, visit their website and follow them on Twitter.