21 May 2012

News : Sector Analysis

Multinationals to drop dirty suppliers

Published:: 30 September 2011
Article Type:: News

Half of multinationals will select future suppliers based upon carbon performance, and 56 per cent intend to deselect suppliers with a poor record on carbon, according to a new report by the Carbon Trust Advisory.

The report examines big business action on emissions and the impact this will have on suppliers. It found that multinationals are increasingly considering the impact of indirect emissions from suppliers, manufacturing, logistics.

Based on interviews with 100 multinational companies the report looks at:

* Environmental risks in global supply chains, such as increasing commodity costs; scarcity of certain resources; the carbon impact of raw materials including their transport and processing; as well as social and reputational risks.

*Which big companies are addressing supplier emissions. This found that companies like Unilever, Marks & Spencer, PepsiCo and BT are taking steps in this area and 84 per cent of the multinationals surveyed expect to address this within the next 2-3 years.

* How this will affect other companies. For example in the UK, while 56 per cent of those surveyed expect to deselect suppliers with a poor record on carbon; 66 per cent are willing to pay a premium of around 10 per cent to purchase a product or service with low emissions; up to 15 per cent would consider providing financial support to help suppliers meet their emissions policies and targets in the future.

* What is driving this? External factors are increasingly pushing companies to act and the report highlights that shareholder and investor pressure is an increasing pressure prompting larger companies to act.

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