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Greening the Supply Chain Yields Business Benefits

February 09, 2011

More and more businesses are working closely with suppliers to improve their sustainable practices.

And now, results of a new study reveal that this type of collaboration can significantly improve the bottom line.

According to The Carbon Disclosure Project 2011 Supply Chain Report, produced by management consulting firm A.T. Kearney, a whopping 86 percent of the companies surveyed saw commercial benefits from working closely with suppliers to improve performance and mutual return on investment –that’s up from 46 percent in 2009.

PepsiCo, for example, has uncovered more than $60 million in energy savings opportunities and a 16 percent reduction in per-unit energy use across its beverage plants, as a result of its carbon management strategy and proprietary energy assessment tool.

“With a robust strategy and proven benchmarks in place, PepsiCo set out to engage and educate suppliers about potential opportunities to innovate their own operations,” said Walter Todd, Vice-President of Operations, PepsiCo UK & Ireland. “By providing suppliers access to the same energy assessment tools we use in our own operations, we’ve seen mutual return on investment.”

The study, which looked at climate change actions and performance of 57 leading global companies and 1,000 of their suppliers across a broad cross-section of industries, also found that:

  • More than 50 percent of large businesses and 25 percent of their suppliers have seen cost savings as a result of carbon management activities.
  • More businesses are training procurement staff in this area (up to 41 percent from 26 percent in 2009) and incentivizing staff through awards and recognition (up from 11 percent in 2009 to 25 percent).
  • Employee motivation and brand management have increased in priority by around 50 percent of businesses; product differentiation has also become an increasingly important objective (60 percent).
  • The percentage of businesses which track and report supply chain emissions more than doubled to 45 percent in 2010.
  • 72 percent of large businesses have their data verified externally. But, only 39 percent of suppliers do –reportedly because of the high costs associated with this process.
  • Carbon management criteria is increasingly part of supplier selection – up to 17 percent from 11 percent and expected to be 29 percent in 5 years.

The full report is available for download here.

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