Big Green Brands Have a Dirty Supplier Problem, CDP Says

(Bloomberg) -- Many big brands with green ambitions don’t know the carbon impacts of their supply chain, a new report shows.

Only half of the suppliers of more than 200 global companies, which include the likes of Unilever Plc, Nike Inc. and Alphabet Inc., had targets to reduce emissions in 2021, according to a report published Thursday by non-profit CDP.

As companies fall over themselves to set goals to reach net-zero emissions within decades, they are struggling to ensure there is a plan for the full scope of their emissions. Suppliers’ carbon impact, defined as Scope 3 emissions in carbon accounts, are typically many times larger than the company’s direct emissions, called Scope 1 and 2.

Almost none of the targets set by suppliers have been vetted by the Science-Based Targets initiative, an arbiter of corporate climate plans. It’s not like the suppliers are racing to set any emission-trimming objectives either. At the current average pace, it would take at least another decade to get the remaining 5,000 suppliers reporting to the CDP to create any kind of climate playbook. (Bloomberg Philanthropies is among the funders of  SBTi.)

Brands rarely look beyond their own emissions, even though their complex supply networks can emit over 11 times more greenhouse gas than their own operations, the report said. This means the 207 companies reporting to the CDP may seem to be on track to achieve their net-zero goals, while buying $5.5 trillion worth of goods and services from dirty sources.

That’s too bad, researchers say. Those suppliers, which worked together with brands on climate plans, mapped out initiatives to trim CO2 emissions by 231 million tons in 2021, about the same as the annual footprint of Pakistan, according to the Global Carbon Project.

“Our data show that corporate environmental ambition is still far from being ambitious enough,” said Sonya Bhonsle, global head of value chains at CDP, in a statement. “Alongside that, companies have blinkers on when it comes to assessing their indirect impacts and engaging with suppliers to reduce them.”

Environmental impact goes beyond greenhouse gas emissions. Sourcing commodities from areas vulnerable to deforestation is another area of concern. Still, over half of traders, manufacturers and retailers engage beyond first-tier suppliers to combat this. The situation also is dire when it comes to risks like flooding and water scarcity. Only 16% of companies work with suppliers to manage water security.

Unilever, Nike and Alphabet haven’t responded to requests for comment.

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