TRANSPARENCY TO TRANSFORMATION: CDP Global Supply Chain Report 2020 BENCHMARKING PROGRESS TOWARDS - Rackcdn.com
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DISCLOSURE INSIGHT ACTION
CDP AFRICA REPORT
TRANSPARENCY TO TRANSFORMATION:
A CHAIN REACTION
BENCHMARKING PROGRESS TOWARDS
CLIMATE SAFE
CDP Global CITIES,Chain
Supply STATES, AND REGIONS
Report 2020
MARCH 2020
FEBRUARY 2021
With the kind
support of
CDP GLOBAL SUPPLY CHAIN REPORT 2020 2
CONTENTS
Foreword 03
Executive summary 04
About this report 06
Risks in the supply chain 09
Climate: Encouraging trends, insufficient action 12
Forests: Supply chains without chainsaws 17
Water: Trickling improvements but a wave of 22
change is needed
Looking ahead 25
Appendix 27
Breakdown of risks by sector and geography
CDP Supplier Engagement Leaderboard
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CDP has prepared the data and analysis in this report factors. Guest commentaries where included in this report
CDP Worldwide, a registered charity number 1122330 and
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No representation or warranty (express or implied) is is not an endorsement of them.
number 05013650.
given by CDP as to the accuracy or completeness of the
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respective shareholders, members, partners, principals,
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CDP GLOBAL SUPPLY CHAIN REPORT 2020 3
FOREWORD
made climate a focus of everything can go it alone -- government,
we do: how we run our data centers, communities, business and
build our offices and products and individuals all must do their part.
how we work with our supply chain. For example, Renewable Energy
We have been carbon neutral since Buyers Alliance (REBA) and the
2007, and in 2019 we matched 100% RE100 initiative help us work with
of our electricity consumption with hundreds of other businesses and
renewable energy for the third year in non-profit organizations to advocate
a row. for renewable power. These efforts
align with our efforts toward greening
However, we know that minimizing
energy grids worldwide, such as
our own footprint is insufficient to
our commitment to add 5GW of
address a problem of this magnitude.
clean energy in key manufacturing
Our supply chain is part of our strategy
regions through renewable energy
for comprehensive climate action. As
investments.
just two examples of our supply chain
Climate change is a constant work; last year all of the new Pixel and Finally, we must have a clear
Nest products were designed with understanding of how we can
threat to the global economy recycled material, and today shipping influence our partners and
and humanity more broadly. of Google hardware to and from our stakeholders to push their climate
Business must do our part to direct customers is carbon neutral. work further. At Alphabet we are
address the problem in our own Although we are still learning and
committed to driving change through
operations and in the way we our work with suppliers, and need our
adapting, we believe lessons from
suppliers’ ambition to match our own.
work with our supply chains. past crises, most recently the
To nudge that along, we have recently
That is the focus we need to pandemic, can provide direction as
announced a plan to develop an open-
create a better future. we take fast action on climate change.
source collaborative platform to drive
Specifically, data-driven solutions,
down the cost of renewable energy,
collective action, and stakeholder
Ruth Porat making it accessible to more suppliers
engagement will be critical.
Chief Financial Officer and companies.
Alphabet First, we should build consensus
We are committed to going even
around solutions grounded in data.
further. Looking forward, we aim to
Drilling down on data is one of
operate on 24/7 carbon-free energy
2020 brought us the unprecedented our best tools, and enables us to
by 2030, and help one billion people
global crisis of the COVID-19 accurately gauge the magnitude of the
live more sustainably through our
pandemic. The tragedy and challenge problem. CDP Supply Chain is a core
products. We will also continue rolling
of COVID has been layered on top part of our efforts at Alphabet to build
out technology to industry partners to
of the crisis that we recognize as data-driven solutions to understand
drive climate action at scale.
climate change. Both threaten the our total carbon footprint. With CDP,
global economy and lives worldwide, we can measure and influence how There is so much more to be done,
both demand strong action from the our suppliers integrate climate change of course. We must look outside
business community. We have seen into their operations. In 2020, 96% of the edges of our own businesses.
the leadership role businesses have our surveyed suppliers reported their We need our supply chain partners,
taken in the pandemic response. carbon footprint, and 75% shared and of course, they need us, and our
Business has increasingly come their targets to reduce it. This visibility climate priorities can and should be
to focus on the actions needed to allows us to better select, support, part of their climate priorities. The
address climate change, both through and partner with our suppliers on their world is out of time on this topic, and
individual corporate operations and climate-related targets. this simple focus and prioritization
those in their supply chains. is essential. We must act now if
Second, COVID has proven that
we are going to avert the worst
At Alphabet, we take our climate collective action is critical to solving
consequences of climate change.
obligations seriously, and have long urgent, global challenges. No group
CDP GLOBAL SUPPLY CHAIN REPORT 2020 4
EXECUTIVE SUMMARY
Response rate of suppliers: To understand the environmental Companies must engage their
impact of a company’s economic supply chains and address
activity, it is not enough to look at environmental risk to remain
its direct emissions and risks. The competitive and resilient
entire value chain must be engaged to
52% evaluate and improve its performance.
This report explores the state of
Climate
environmental risks in supply chains
and what approaches businesses are
taking to mitigate them.
US$1.26 tn
Total financial impact reported by
Data is drawn from over 8,000
suppliers due to environmental risks
companies at all stages of the value
57% chain who disclosed through CDP in
2020. These companies responded
(climate change, deforestation and
water insecurity) expected in the
next five years.
Forests to requests for transparency from
154 major buyers who are members
of the CDP Supply Chain program.
Together these buyers spend US
59% US$120 bn
$4.3 trillion in procurement annually
and ask suppliers to provide data via
CDP’s disclosure platform to help
them understand and address the
A subset of the environmental
Water environmental impacts and risks of
risks will lead to direct costs of
their value chain.
US$120 billion within five years
which are likely to be passed up
the chain to buyers.
CDP GLOBAL SUPPLY CHAIN REPORT 2020 5
Suppliers are cutting their own emissions, Percentage of suppliers
but must improve engagement in their own driving upstream change
supply chains. in their own supply chain
619 million 7% 37%
In aggregate, suppliers undertook of the companies who completed the Climate
activities reducing GHG emissions CDP climate questionnaire made it
by 619 million metric tons and saved onto the CDP Supplier Engagement
US$33.7 billion in the process. Rating Leaderboard.
The scale of impact in the supply
55%
chain is increasingly being Forests*
recognized by suppliers
11.4x higher 1,000+ 18%
Supply chain emissions are on Setting targets to reduce emissions Water
average 11.4 times higher than throughout the value chain (Scope 3)
operational emissions, more than is becoming a new business norm.
double previous estimate, due to This is only achievable with strong
more comprehensive emissions supply chain engagement. 1,000+
accounting. companies have set or committed
to set science-based targets, which
usually require Scope 3 targets.
*This figure was amended on 10
February 2021 to correct an error
in the original published version
of this report.
CDP GLOBAL SUPPLY CHAIN REPORT 2020 6
ABOUT THIS REPORT
This report has been written by CDP, time. In total 15,637 companies were
using CDP’s Supply Chain program invited to participate, with over 8,098
data submissions to evaluate the unique responses received.
activities of reporting organizations
Most respondents provided
as a group, and to identify
information on climate change,
meaningful insights about the supply
with 8,033 disclosing suppliers. A
chain impacts on setting science-
smaller number of businesses were
based targets, zero-deforestation
asked to respond on forests and
and water security targets.
water issues, as these are newer
The CDP Supply Chain program, additions to the CDP Supply Chain
representing 154 member program. The Water questionnaire,
organizations with US$4.3 trillion introduced in 2013, was sent to 4,108
in annual procurement spend, companies with 2,449 completing
requested that suppliers report to the questionnaire. The Forest
members on their current and future questionnaire, introduced in 2017,
risks and opportunities related to was sent to 788 companies with
these environmental issues. 448 completing the questionnaire.
The analysis in this report is
Suppliers responded to standardized
representative of the CDP Supply
questionnaires on climate change,
Chain program data only.
forests and water security: a full
version and a simplified version During analysis responses have
made available for organizations been assessed and a small number
with an annual turnover of less than of outlier data points have been
US$250 million or €250 million, manually excluded to avoid reporting
which can also be used by larger misleading statistics.
organizations disclosing for the first
CDP Supply Chain members1
Premium members Lead members
Microsoft Corporation Alphabet, Inc. LinkedIn
Stanley Black & Decker, Inc. Bank of America L’Oréal
Walmart, Inc. Barclays McDonald’s Corporation
Bayer AG Nike, Inc.
Dell Inc. Nordstrom, Inc.
Electrolux NRG Energy Inc
GSMA Ørsted
J Sainsbury Plc Philip Morris International Inc.
JT International SA Signify NV
Climate change member Juniper Networks, Inc Target Corporation
Forests member Kellogg Company The Coca-Cola Company
Water member Koninklijke Philips NV Virgin Money UK Plc
1 Not all members are publicly listed here The LEGO Group Wells Fargo & Company
CDP GLOBAL SUPPLY CHAIN REPORT 2020 7
CDP Supply Corporate members
Chain members1 Accenture Deutsche Telekom AG
(continued) Acer Inc. Diageo Plc
Aguas Andinas SA Eaton Corporation
Airbus SE Empresas CMPC S.A.
Ajinomoto Co. Inc. Fiat Chrysler Automobiles NV
Altria Group, Inc. FIRMENICH SA
Amdocs Ltd Flowers Foods
Anheuser Busch InBev Ford Motor Company
Arcos Dorados Fujian Sunner Group
ARKEMA Fujitsu Limited
AT&T Inc. General Motors Company
Avianca Holdings S.A. Givaudan SA
Banco Bradesco S/A Grupo BIG
Banco do Brasil S/A Grupo Bimbo, S.A.B. de C.V.
BMW Grupo CCR
Braskem S/A Grupo Santander Brasil
Bristol-Myers Squibb Hewlett Packard Enterprise
Company
British American Tobacco
Honda Motor Co., Ltd.
BT Group
Honda North America, Inc.
Caesars Entertainment
HP Inc
Caixa Econômica Federal
HSBC Holdings Plc
CANPACK Group
Husqvarna AB
CBRE Group, Inc.
Lead members joining for 2021 Imperial Brands
Cellnex Telecom SA
Intel Corporation
Ahold Delhaize Cementir Holding S.p.A.
International Flavors
Estee Lauder Companies Inc Chunghwa Telecom
& Fragrances Inc.
CIA ULTRAGAZ S/A
Iochpe-Maxion S.A.
Corporate members joining for 2021 Cisco Systems, Inc.
Itaú Unibanco Holding S.A.
Advance Auto Parts, Inc. Clorox Company
Jaguar Land Rover Ltd
Capital One Financial CNH Industrial NV
Johnson & Johnson
Keurig Dr Pepper Colgate Palmolive Company
KAO Corporation
Moody’s Corporation Croda International
KPMG UK
Senior PLC CVS Health
Los Angeles Department
Trimble Inc. Daimler AG of Water and Power
1 Not all members are publicly listed here
CDP GLOBAL SUPPLY CHAIN REPORT 2020 8
CDP Supply Corporate members (continued)
Chain members1 MasterCard Incorporated Samsung Electronics
(continued) MetLife, Inc. Santa Catarina
Metro AG Sekisui Chemical Co.,Ltd.
Metropolitan Transportation Sky plc
Authority (MTA) Snam S.p.A
Michelin SSE
Ministry of the Environment, Stéarinerie Dubois
Government of Japan
Swisscom AG
Movida Participacoes Sa
Symrise AG
MRV Engenharia
e Participações TD Bank Group
National Grid PLC Telstra Corporation
Naturgy Energy Group SA The Allstate Corporation
NEC Corporation Toyota Motor Corporation
NHS England and Unilever
NHS Improvement
U.S. General Services
Nissan Motor Co., Ltd. Administration
Nokia Group Vale SA
One Jeanswear Group Varian Medical Systems, Inc
PepsiCo, Inc. Velux A/S
Pirelli Virgin Management Limited
Prudential Financial, Inc. Visa
Prysmian SpA VMware, Inc.
Restaurant Brands International Vodafone Group
Royal Bank of Canada Volkswagen AG
SABIC Volvo Car Group
S Group Wal Mart de Mexico
S.C. Johnson & Son, Inc. Western Digital
The Yokohama Rubber Co., LTD
Zurich Insurance Group Ltd.
1 Not all members are publicly listed here
CDP GLOBAL SUPPLY CHAIN REPORT 2020 9
TACKLING RISK,
BUILDING RESILIENCE:
Unlocking the power of
your supply chain
Environmental risks are material for Environmental risks are set to
business. Addressing these through increase as the planet, society and
supply chain engagement is vital for economy changes.
US$1.26 tn companies to be competitive and
resilient in the changing market and to
build back better from COVID-19.
Intensifying climate change and
environmental degradation will
of revenue at risk reported by increase the physical risks. Society will
suppliers within five years In 2020, over 8,000 suppliers adapt in response, raising awareness,
disclosing through CDP reported that spurring action and increasing
US$1.26 trillion of revenue is likely reputational and regulatory risks.
to be at risk over the next five years So companies that fail to manage
due to climate change, deforestation the environmental risks in their
US$120 bn
and water insecurity. The anticipated supply chain will also face greater
financial risk covers potential loss of reputational and regulatory risks.
revenue due to changing consumer
Managing the direct environmental
in increased costs in the next preferences, loss of access to capital,
impact of your operations is no
five years due to environmental and increased operational costs. The
longer enough. Businesses must put
supply chain risks could be faced increased costs alone amount to
the spotlight on - and engage - their
by corporate buyers as much as US$120 billion, and are
supply chains.
caused by physical environmental
impacts as well as addressing Laggards that fail to take responsibility
regulation and market changes. for supply chain impacts and risks will
fall behind, while leaders who manage
Financial risks have a domino effect
and reduce environmental risk
throughout the chain and corporate
through supply chain collaboration
buyers will pay the price. Most supply
will not only be more competitive
chains run on very tight margins with
today, but will be more resilient for the
suppliers often passing cost increases
economic shifts of tomorrow.
on to their customers.
Major buyers could see a hike of
US$120 billion in costs in the next
five years, due to these environmental
risks in their supply chains.
And that is only a current snapshot.
CDP GLOBAL SUPPLY CHAIN REPORT 2020 10
These leading companies include
CDP’s Supply Chain members.
The CDP Supply Chain program These members are committed to Companies are increasingly asking
brings together a diverse group of driving action by integrating data their suppliers to match their
more than 150 major purchasing into their purchasing processes. ambition, reduce their greenhouse gas
organizations from around the world, In 2019 73% of CDP Supply Chain emissions, safeguard water resources
with an enormous US$4.3 trillion program members when surveyed and protect forests, through setting
in combined procurement spend. said they expect to deselect suppliers and achieving ambitious targets.
These companies work with their based on inadequate environmental
suppliers to encourage disclosure, performance.2
transparency, and continuous
environmental improvements, thus
building resilient supply chains.
Additionally, 65% of surveyed 94% of companies with science-based
members in 2019 reported using targets include scope 3 emissions.
environmental metrics, including CDP
data, in their supplier relationship
management processes, with a further
30% saying they plan to reach that
point in the next two years.3
We want to do the right thing for the world around The BMW Group has set a clear target to reduce
us and in 2020 we were the first Australian company CO2 emissions by 20% for its supply chain by 2030,
to join CDP Supply Chain. This partnership helped compared to 2019. Our supplier network plays an
us deliver training, tools and support to our strategic integral part in meeting these goals. We have been
suppliers as they considered and disclosed their a member of CDP Supply Chain since 2014 in order
environmental impacts. We’re now using this to create transparency around the CO2 emissions
information to understand the volume of emissions of our key suppliers and engage with them to tackle
being released from the products and services climate risks and cut emissions. The BMW Group
we purchase from our suppliers and to develop itself has reported through CDP for years and is
ambitious strategies together to further reduce them. proud to achieve a place on the ‘A List‘ in 2020. We
We’re buoyed by the enthusiasm and commitment of also use CDP company scores for our suppliers as
our suppliers and, while we’ve got a long way to go, an engagement tool.
we will reduce our impact on the environment.
Alexandru Butiri, Chief Procurement Wolfgang Obermaier, SVP Indirect
Officer, Telstra Corporation Ltd Goods and Services, Raw Material,
Production Partners, BMW
2 This statistic is taken from a poll conducted for the 2019 CDP Supply Chain report
3 This statistic is taken from a poll conducted for the 2020 CDP Supply Chain reportCDP GLOBAL SUPPLY CHAIN REPORT 2020 11
A GROWING MOVEMENT
Growth in CDP Supply Chain disclosures, 2008 – 2020
Year
2020 8,098 15,637
2019 6,957 13,111
2018 5,600 11,000
2017 4,800 9,970
2016 4,366 8,298
2015 4,005 7,879
2014 3,396 6,503
2013 2,868 5,659
2012 2,415 6,215
2011 1,864 4,234
2010 1,000 1,853
2009 710 1,402
2008 634 2,318
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Total suppliers who disclosed through CDP
Total suppliers asked to discloseCDP GLOBAL SUPPLY CHAIN REPORT 2020 12
CLIMATE:
Encouraging trends,
insufficient action
Decarbonizing supply chains is Over half of requested suppliers
the key to meeting ambitious responded. The information received
Sekisui Chemical Co., Ltd. aims to climate goals showed progress in cutting emissions,
achieve net-zero GHG emissions from
and thereby costs, but also revealed
its business operations by 2050, and we Despite the profound global
have set a science-based target which
the size of the challenge as suppliers
disruption of COVID-19, CDP Supply
includes a 27% reduction of our scope 3 looked more closely at their own
Chain members continued to drive
emissions by 2030. Sekisui Chemical supply chains.
Group engages in reducing GHG
climate transparency and action in
emissions throughout the supply chain supply chains.
by monitoring emissions at every stage,
The number of requests for supplier
from raw material procurement to
development, production, transportation disclosure from CDP Supply Chain 8,033
suppliers in 2020
and use of products. members grew by 19% to more 6,892 disclosed on
than 15,000 in 2020 - a result of suppliers in climate, which
The amount of emissions caused by
purchased goods and services account new members but also of existing 2019 disclosed was a 52%
members deepening their engagement on climate. response rate.
for the largest proportion of our GHG
emissions in Scope 3, at 50% or more. with their supplier bases.
To reduce these indirect emissions, we
will review the selection criteria when
adopting new materials. In addition,
we are engaging with our suppliers by
utilizing the CDP supply chain program,
in order to identify the emissions
reductions of our suppliers at the stage
of raw materials production.
Sekisui Chemical Co., Ltd.CDP GLOBAL SUPPLY CHAIN REPORT 2020 13
Climate action is improving, with
suppliers demonstrating increased
emissions reductions Toyota Motor Corporation became
a CDP supply chain member
in 2016 to support continuous
environmental initiatives conducted
Suppliers reported combined savings with our suppliers. The program
of US$33.7 billion in 2020 through enables us to determine our
actively cutting emissions. This supplier’s risks, opportunities and
is a 67% increase in cost savings their initiatives on climate change.
According to the spirit of mutual
compared to 2019.
benefit based on mutual trust, we
Suppliers undertook activities that cut regularly create opportunities for
environmental communication
emissions by 619 million metric tons
by holding briefing sessions and
of C02e in the last year. response guidance, where we share
information on social trends and
The total direct emissions by suppliers
Toyota’s initiatives and provide
was 6,714 metric tons (MtCO2e),
Suppliers represent combined 2018 feedback on response results.
roughly equal to the combined 2018 These activities would encourage
greenhouse gas emissions of the US
greenhouse gas emissions of the our suppliers to continue improving
and Canada
United States and Canada. their environmental performance
and disclosure. Through such close
The ability to cut costs by reducing collaboration with our suppliers,
emissions would be a strong we received a 96% response rate
argument for action, even if the risks for CDP climate change 2020,
which accounts for approximately
associated with failure to act were
619 MtCO2e
84% of our total purchasing value
not as pressing as they are. Suppliers in Japan. Through our continuous
are treating the issue as a priority, efforts, we were pleased to report
with 72% of responding companies that approximately two-thirds
of emissions were reduced by of our suppliers reduced their
reporting that issues around climate
suppliers from 2019-2020... CO2 emission intensity (total
change receive board-level oversight.
emissions/net revenues) in 2020
This is easily justified by the scale compared to the previous year.
of the problem. In 2020, suppliers Achieving the SDGs, including
reported that they were exposed environmental sustainability, is
to some US$1.21 trillion in a huge challenge for us all. To
159
potential financial impact related contribute to this shared goal,
every Toyota person all over the
to climate change.
world will be resolute in “Producing
Happiness for All”. We also wish
...equivalent to the annual emissions to take a strong step forward with
of 159 coal power plants our suppliers.
Toyota Motor Corporation
US$33.7 bn Risk type # of reported
risks
Risk US$
of savings from suppliers’ Acute physical 1,981 319,334,077,747.44
emissions reductions
Market 1,553 741,870,472,483.50
Emerging regulation 1,549 151,696,170,484.16CDP GLOBAL SUPPLY CHAIN REPORT 2020 14
Suppliers are turning the spotlight These figures underline that real
on their own supply chains. climate leadership cannot be achieved
without tackling scope 3 impacts.
In 2020, suppliers reported upstream
emissions that were, on average, 11.4
times greater than those produced
Supplier engagement continues
to remain the exception rather 11.4x
higher
through their direct operations. than the norm.
This is a big jump from 2019, when Measuring scope 3 emissions is
the reported upstream emissions only a first step, however. Despite
were five and a half times greater the quantification of risk exposure Supply chain emissions
than operational emissions. This is and upstream emissions, only 37% are 11.4 times higher than
not an indication of an increase in of suppliers are taking action and operational emissions
supply chain emissions. Rather, this engaging with their own suppliers,
statistic promisingly shows that more down from 39% in 2019.
suppliers are measuring emissions in
their supply chain (known as scope 3
37%
emissions), and accounting for those
emissions over the full lifecycle of
their products or services in line with
the GHG protocol. of suppliers are taking supply
chain action themselves, down
from 39% in 2019
Upstream emissions: scope 3 emissions are on average 11.4 times higher than operational emissions
Retail 28.3
Apparel 25.2
Services 21.2
Food, beverage & agriculture 11.2
Biotech, health care & pharma 7.9
Manufacturing 7.7
Fashion Charter signatories recognize
that the biggest impact in terms of GHG
Hospitality 6.8
emissions lies in the supply chain. At
the same time, there is a recognition
Materials 4.3 that Scope 3 emissions in the supply
chain are a big challenge for the apparel
sector. We began working with CDP, also
Infrastructure 4.0
at the request of many signatories, to
demonstrate that existing and incoming
Transportation services 1.5 companies to the Charter are measuring
and ultimately managing emissions in
Power generation 1.1 order to meet the goals they have set
through the Fashion Charter.
Fossil Fuels 0.7
Lindita Xhaferi-Salihu,
Sectors Engagement Lead,
UN Climate Change
Average of final ratio (Scope 3 [supply chain emissions] : Scope 1
+2 [operational emissions and direct emissions])CDP GLOBAL SUPPLY CHAIN REPORT 2020 15
As a responsible business, reducing greenhouse
gas emissions in our supply chain supports
our ambition of reaching net-zero by 2050 to
deliver a clean energy future for our customers.
As a CDP supply chain member, National Grid
uses CDP scores to maintain transparency
and accountability in meeting customer and
shareholder expectations to address climate
change. We’re proud to be on the “A List” and are
committed to keeping this good work going.
Vivienne Bracken, Chief Procurement Officer,
National Grid
The climate crisis means we must accelerate
change. This means taking action across our
value chain as we pursue bold purpose and
sustainability ambitions – like our ambition to
become Climate Positive before 2050 and our
science-based targets.
Achieving this requires collaboration not
just within Givaudan, but with our suppliers,
customers, stakeholders, colleagues and partners.
That’s why engagements like our CDP supply
chain membership are so important.
As businesses re-examine their role in society, we
must be resilient and prepared for the risks of a
constantly-changing world. Now more than ever,
businesses must come together and lead the way
as a force for good.
Willem Mutsaerts, Head of Global Procurement
and Sustainability, GivaudanCDP GLOBAL SUPPLY CHAIN REPORT 2020 16
For more than 10 years, The Estée Lauder Bayer is committed to reach net-zero value chain
Companies has reinforced its commitment emissions, by 2050 at the latest. To achieve that,
to environmental stewardship by disclosing we’ve set science-based targets: we’ll reduce
through CDP to ensure consistent, transparent scope 1 and 2 emissions by 42% by 2030 - which
reporting around its environmental impact. is in line with 1.5°C, the more ambitious goal
Now, in this critical decade for the planet, the of the Paris Agreement. Likewise, we’ll reduce
company is taking even more decisive action our main scope 3 emissions by 12.3%. Overall,
on climate change. switching fully to renewable energy is key.
Addressing scope 3 - the biggest share of our
As we take on the broader scope of addressing
footprint - is a challenge: data availability and
carbon impact beyond the company’s direct
quality is poor and comparability often weak.
operations, we’re excited to deepen our
Plus, it takes time to engage with suppliers on
collaboration with CDP by becoming a Supply
this issue. To overcome these challenges and
Chain member. With ambitious science-based
create impact at a larger scale, we became a
targets for Scope 3 emissions at the forefront
member of CDP supply chain and we collaborate
of our climate agenda, the CDP Supply Chain
with initiatives such as Together for Sustainability
program will support the implementation of
(TfS) and the Pharmaceutical Supply Chain
integrated solutions for emissions reduction
Initiative (PSCI).
across the company’s supply chain, and foster
joint value creation with supply chain partners Thomas Udesen, Executive Vice President
and third-party manufacturers. and Chief Procurement Officer, Bayer
Building on the successes and learnings of
achieving net-zero carbon emissions and 100%
renewable electricity across our direct operations,
the road ahead could not be more clear: resilient,
low carbon supply chains are critical to ensuring a
healthy, beautiful planet for generations to come.
As a CDP Supply Chain member, we at Samsung
Gregory F. Polcer, Executive Vice President, Global
Electronics hope to see more of our suppliers
Supply Chain, The Estée Lauder Companies
undertake actions to reduce emissions year
on year. In 2020 we asked our key suppliers to
disclose through CDP and received responses
from 163 suppliers, with a response rate at
71%. We also provide incentives to suppliers
to participate in CDP disclosure and set
carbon reduction targets. In addition, Samsung
Electronics operates joint educational seminars
regularly with CDP, which share experiences
to help suppliers reduce electricity, gas and
carbon emissions. We will continue our efforts
to engage with more supply chain partners by
making it easy to participate in carbon emission
reduction activities.
Partner Collaboration Center,
Samsung Electronics Co., LtdCDP GLOBAL SUPPLY CHAIN REPORT 2020 17
FORESTS:
Supply chains
without chainsaws
Deforestation: a growing risk
in a post-pandemic world
448
Ten years ago, we started our first steps
on our journey to protect forests, at our In response to the global pandemic,
production site in the heart of a protected economic recession, climate change
French Natural Park. and the biodiversity crisis, the need to
transition to a sustainable and resilient suppliers disclosing
The path has been rich in challenges,
but with the feedback of our most deforestation-free future has never on forests at the
engaged customers and suppliers we been greater. The precise pathway of request of their buyers
have been able to progress towards COVID-19 is not yet established, but
zero-deforestation.
deforestation is almost certainly an
Since our RSPO SCCS certification, important part of the journey.4
through our ‘No Deforestation, No
Protecting and restoring forests was
US$5bn
Peat, No Exploitation: Driving positive
impact for local communities and already high on the global agenda, as
Inclusion of smallholders’ policy, we a critical tool for meeting the goals of
have continuously improved our level of
the Paris Agreement and achieving the
requirements all along the supply chain. in reported deforestation-
UN Sustainable Development Goals.
related risks
There is no doubt that we need to Continued loss of these carbon sinks,
accelerate action against deforestation, along with the habitat and biodiversity
due to the urgency of addressing global
they contain, will only exacerbate both
climate change. We also believe that
deforestation is linked with acts of climate change and its impact.
corruption and violation of human rights
236
Companies must act rapidly to
which have to be collectively tackled all
along the supply chain in accordance ensure they identify and eliminate
with the Principles of the United Nations unsustainable deforestation practices
Global Compact. This is a shared within their supply chain, as well as suppliers reported
responsibility between the consuming identifying and managing inevitable
and producing countries.
sourcing commodities
forest risk based on commodity from forest risk
Consequently, we are engaged in consumption. countries
collective initiatives allowing us to
increase traceability and transparency
of forest risk commodities. For us,
these are the key conditions to reach
zero-deforestation. Sharing experiences
and data through CDP Supply Chain with
our suppliers is a unique opportunity
and the way to succeed in the
transformation of the agricultural
5x
commodities supply chain. more suppliers (448 out
As the world still needs to be fed, of 788) responded when
sustainable agricultural practices must asked to disclose on forests,
be mainstreamed among small local compared to the pilot year
farmers, with knowledge-sharing of in 2017
best practices.
Ghislaine Auméras Broch,
Head of Sustainability,
4 See also: Bats, Coronaviruses, and
Stéarinerie Dubois
Deforestation: Toward the Emergence of
Novel Infectious Diseases? Aneta Afelt,
Roger Frutos, and Christian DevauxCDP GLOBAL SUPPLY CHAIN REPORT 2020 18
Commodities driving deforestation: 236 suppliers reported sourcing This demonstrates the pressing need
Cascading awareness commodities from forest risk for companies to continue to request
countries. By increasing their this information from their suppliers,
The CDP Supply Chain program
engagement with suppliers from an essential first step in understanding
began covering forests in 2017.
high-risk regions, companies can and minimizing their risk exposure.
Since then, the number of members
expand capacity building efforts,
has more than doubled from 8 to 19, Deeper knowledge is even more
increase transparency, disseminate
as awareness of the urgency of the lacking, with just 26% of suppliers able
best practices and reduce their
issue has grown. These members are to trace even part of their
deforestation risks.
engaging with suppliers involved in forest risk commodities back to the
the production and use of forest risk Suppliers were asked to report on forest, plantation or farm where they
commodities linked to deforestation the forest risk commodities that they originated. Furthermore, many found
(including timber, palm oil, cattle produce or consume. The responses it difficult to measure and report
products, soy and rubber). show a huge knowledge gap between their risk exposure. Although 73% of
the various forest risk commodity suppliers said they had undertaken
Between 2001 and 2015, 27%5 of
sectors. 84% of timber products a forest related risk assessment,
global forest loss can be attributed
suppliers disclosed data, while just the internal skills and capabilities to
to deforestation through permanent
28% of coffee suppliers disclosed. address those risks remain limited.
land use change for commodity
These numbers drop further when
production, including beef, soy, palm Despite this incomplete picture, 37%
suppliers were asked to drill down to
oil, and wood fiber. of suppliers still reported a total
consumption and production data.
potential financial impact of
Members requested disclosures on
US$5 billion* associated with risks
forests from 788 suppliers, receiving
linked to the production, consumption
448 responses - a fivefold increase
and trade of forest risk commodities.
since the pilot year in 2017.
%
% of responding suppliers disclosing
100
exposure to commodity
% of exposed suppliers disclosing
90 data on commodity
84 84
% of exposed suppliers disclosing
80
consumption and/or production data
70 68
67
62
60
55 55
51
50
45
40
40
30 30
30 27 28
22 25
21
20
15
13
10 9 7
0
Cattle Palm Oil Soy Timber Cocoa Coffee Rubber
Forest risk Commodity 5 Curtis, P.G. et al. (2018). Classifying drivers of
global forest loss. Science 361:1108-1111. DOI:
10.1126/science.aau3445
*Likely to be at risk over the next five yearsCDP GLOBAL SUPPLY CHAIN REPORT 2020 19
Strengthening supplier engagement Promoting collective action The complexity and nature of this
environmental challenge also requires
The coordinated action of the CDP Hundreds of companies had made
unprecedented collaboration. Many
Supply Chain program is clearly pledges to eliminate deforestation
CDP Supply Chain members have
having an impact. In 2020, its 19 from the production of agricultural
joined the Consumer Goods Forum’s
forests members had 130 suppliers commodities by 2020, as part of
Forest Positive Coalition of Action
(17% of total sample) in common, a collective commitment made by
to continue promoting and driving
despite covering diverse sectors. the Consumer Goods Forum and
positive changes.
Supplier companies that received through the New York Declaration on
disclosure requests from multiple Forests. While this ambitious industry All supply chain actors must adopt
members had a much higher goal was missed, many companies this level of ambition and commitment
response rate of 75%, compared have reiterated their commitment to to collaborative action. Only then will
with those that only received requests eliminate deforestation and contribute we be on the right path to a resilient,
from a single member at 57%. towards restoring the world’s forests. zero-deforestation, net-zero economy.
Changing supplier behavior is best
Public commitments are a critical
achieved with clear and consistent
first step, but these statements must
expectations from customers. By
be followed by concrete actions by
integrating data and insights into
companies and their value chain
procurement decisions, CDP Supply
partners. This is still far from the norm,
Chain members are accelerating
with comparatively few companies
the pace at which this change
making it onto the CDP A List for
will happen.
forests. Encouragingly, however, this
number is steadily rising, doubling in
2020 from 8 to 16.
84%
of timber products suppliers
disclosed data, while just
28% of coffee suppliers
disclosed
26%
Only 26% of suppliers
are able to trace even
part of their forest risk
commodities back to the
forest, plantation or farm
where they originatedCDP GLOBAL SUPPLY CHAIN REPORT 2020 20
The Chinese white feather poultry enterprise CMPC encourages small timberland and sawmill
Sunner has adopted a cradle-to-gate and circular owners to use sustainable forest management
economy approach to its breeding, cultivation and/or chain of custody certifications or to
and deep processing activities, including operate under our “CMPC non certificate supplier
waste-to-fertilizer and waste-to-energy. procedure”. Through the years, with the support
of our compliance department and a dedicated
Corporate sustainability is vital for Sunner
committee, CMPC developed a continuous
to achieve our business goals. Sunner has
improvement process to identify and address
insisted on increasing our core competence
potential weaknesses. The aim is to maximize
by benchmarking with international good
the area under certification, which in turn reduces
practices whilst expanding our corporate
inherent risks such as the procurement of timber
sustainability work.
coming from high-risk sources. As a result,
Sunner mainly uses soybean, palm oil, and CMPC is able to ensure that 97% of the total fiber
cattle products during the feeding, incubating, input for its pulp, wood and paper production
and processing period of our white feather is certified or has undergone a rigorous due
chicken and beef products. These high forest- diligence process. In Chile, the company supports
risk commodities are sourced through vendors the certification (FSC and PEFC) of small and
in China. Sunner can trace the country of origin medium-sized timberland owners through a
of these commodities to countries with high sustainable forest management group. In doing
deforestation risk, such as Malaysia, Indonesia, so, CMPC provides technical consulting services
Brazil, and Argentina. Disclosing information to group members, in an effort to support and
about forest conservation through CDP enables give priority to local and small business-owners.
us to act on deforestation risks and incorporate CMPC currently offers four support programs to
‘zero deforestation’ into our overall sustainable small forest-holders, which were launched after
business strategy. Chile’s large wildfires in 2017. These include
technical workshops for suppliers; incentive plan
This goes beyond disclosure and transparency for implementation of due diligence systems;
- we want to fundamentally reduce and manage wood log procurement program from SMEs; and
deforestation risk and climate change impacts. the creation and promotion of sustainable forest
Thus, we chose to join CDP as a supply chain management certification groups.
member. In 2020, we invited strategic suppliers,
including suppliers for animal feed, grain oil Nicolás Gordon, Director of Corporate
and herbal medicine, to disclose forest-related Sustainability , CMPC
information to us via CDP. We also work with
CDP to provide capacity-building activities for
our suppliers to enhance their awareness and
management capacity for deforestation risks.
In the coming year we will continue to help our
suppliers increase their transparency and take
further actions on deforestation
and sustainability.
Fujian Sunner GroupCDP GLOBAL SUPPLY CHAIN REPORT 2020 21
Arcos Dorados is aware of the impact its supply
chain has on the sustainability of its business,
and this is a priority for us. As a company, we
are fully committed to the environment and are
doing everything possible to reduce the impact
of our operation by means of our Recipe for the
Future platform. For this reason, we actively
work to identify, reduce and mitigate the social
and environmental impacts, together with our
suppliers, encouraging best practices in each
stage of the supply chain. Environmental and
social management must permeate the entire
supply chain, which is why Arcos Dorados works
with our suppliers, ensuring they comply with
best practices, endorsed or recognized under
international standards.
The company participated in the CDP Supply
Chain Program as a member in 2020 for the
fourth consecutive year. Arcos Dorados plays
a leading role among the members of CDP
Latin America, achieving the highest response
rates from our suppliers in disclosing their
environmental impacts through the CDP
questionnaires. In 2020, Arcos Dorados achieved
a 99% response rate from our requested suppliers
in three questionnaires: climate change, forests
and water security. In 2019, their suppliers have
had a total emission reduction in the last year of
close to 9 million tCO2e, which is equivalent to
taking 640,000 cars off the road for one year.
As the largest franchisee, Arcos Dorados is
following McDonald’s corporate commitment
to reduce GHG emissions from 2015 levels by
36% in the restaurants and offices by 2030. Also,
the company is committed to reducing GHG
emissions from 2015 levels by 31% in supply
chain processes by 2030.
Leonardo Correa De Souza Lima, Corporate
Sustainable Development & Social Commitment
Director, Arcos DoradosCDP GLOBAL SUPPLY CHAIN REPORT 2020 22
WATER:
Trickling improvements but a
wave of change is needed
Preserving water as a resource A rise in reported reputational risks
Water is vital to sustain life on Earth,
and it is also a critical component
In 2020, suppliers identified US$248
billion associated with all water-
2,449
of the global economy. Currently, related risks. In previous years the Responders
businesses risk draining our finite value of reported risks was dominated
freshwater resources and polluting by physical impacts (e.g. floods,
what remains. droughts, storms) whereas this
year we see a major increase in the
To prevent the worst impacts of
financial value of reported reputational
water pollution, scarcity, flooding,
US$248
and market risks, which is now almost
and disruption to people, planet
equal to physical risks.
and business, companies need to
bn
undertake a paradigm shift in their These reputational risks will not only
water stewardship and management. affect the companies that report
This means looking not only at their them. Companies are coming under
own practices but those in their more and more scrutiny regarding Risk associated
supply chain. water stewardship practices in their
supply chain. Those companies that
want to minimize and mitigate these
environmental and financial risks
urgently need to engage their suppliers
on water security. 14%
of disclosing companies
Types of risk reported that more than
half of their facilities are
exposed to water risks
with the potential to have
a substantive financial
impact on their business.
Reputation & markets
18%
Technology & Other
US$119 billion
US$2 billion
of suppliers are engaging
with their own suppliers on
water stewardship
Physical
Regulatory US$129 billion
US$1 billionCDP GLOBAL SUPPLY CHAIN REPORT 2020 23
Increasing clarity on water use
2019 suppliers 2020 suppliers % responding
As companies begin considering reporting this reporting this suppliers
their water-related risks, the first step data data reporting data
is to understand their withdrawal, 2020
consumption, and discharge rates.
More and more suppliers are Withdrawal 1,208 1,504 61%
disclosing information in each of
these categories in response to
Consumption 1,134 1,444 59%
requests from CDP Supply Chain
water member companies. This
improvement needs to continue so Discharge 1,091 1,377 56%
that all companies can better manage
their water-related risks and usage.
Furthermore, each supplier must
engage with its own value chain to
fully understand its own water risk.
The size of the financial risk
identified by suppliers from water
issues shows how urgent this need
is. These companies need to step up
and better understand the risks and
opportunities in their supply chain.
Leadership and cascading action Only 32% of disclosing suppliers had a Support from the highest levels of a
public water policy, and just 5% had a company is imperative to effect real
CDP Supply Chain members have
company-wide target for reducing their change. This year 62% of suppliers
illustrated their commitment to
water pollution. This is significantly reported board-level oversight on
water stewardship and supply chain
lower than the performance of the water, making 2020 the second year
management. Their suppliers have
purchasing organizations requesting in a row with a 3% of higher increase.
responded by increasingly disclosing
information from their suppliers. This pace of improvement is steady,
their water-related risks and the
Amongst these Supply Chain but unimpressive. For climate change,
potential financial impacts they face.
members, 76% reported having a for example, 72% of suppliers report
However, this increase in disclosure public water policy and 15% had a board-level oversight. This growth
has not yet been followed by company-wide target for reducing their continues to illustrate the slow but
improvements in water-related water pollution. steady pace at which companies are
metrics associated with leadership. improving their water management
Although three times as many Supply
Suppliers are still lacking strong oversight.
Chain member companies have water
governance structures, targets and
pollution targets as their suppliers We need to see a wave of change
public commitments. This illustrates
(15% vs. 5%), this is still far too low. in water leadership and governance,
a dearth in the corporate leadership
to mitigate business risks throughout
needed to achieve water security. There is room for improvement at all
the value chain and to build a safe,
levels of the supply chain - just 18%
water-secure future.
of suppliers report engaging with their
own suppliers on water security.CDP GLOBAL SUPPLY CHAIN REPORT 2020 24
At Walmart Mexico & Central America we are
acutely aware of the challenges of water security
for Mexico. Water management in our supply
chain is key to achieving our commitment of
becoming a regenerative company by 2040 and
protecting 50 million acres of land and 1 million
miles of ocean. This will depend on the collective
action and transparency that we can encourage
for our operations and suppliers. The use of water
is essential to the production of our products,
so we identify suppliers that have strong levels
of sustainable water management to ensure
the supply of these products into the future.
During 2020, 48% of our suppliers reporting
through CDP were national to Mexico, while 52%
represented suppliers from 15 other countries.
This year, 66% of our suppliers already include
water security within their long-term business
objectives, aligning with our shared vision and
adopting good practices. An indicator of the
importance of managing water resources is that
13% of these suppliers already identified some
negative impacts due to water risks during the
2020 reporting period. Therefore, collaboration
with suppliers is key to act in advance of these
challenges, and improve risk awareness in the
supply chain - 48% of our suppliers reported that
they also run water risk assessments with their
own suppliers. This is cascading transparency
and awareness down the chain. Our goal is to take
advantage of common opportunities and shared
long-term strategies to mitigate water risks with
our suppliers, as we seek to generate shared value
through our value chain.
Claudia de la Vega Martínez, Director
of Corporate Affairs, Walmart MexicoCDP GLOBAL SUPPLY CHAIN REPORT 2020 25
ENGAGING THE VALUE CHAIN:
How to build back better
Despite the devastations, In our global COVID-19 recovery Supply chain engagement works. The
uncertainty and economic turmoil efforts, we have an obligation to build companies who are working with their
of 2020, corporate commitment back better. To mitigate and adapt customers and reporting through CDP
to transparency and improvement against the shocks of irreversible have already undertaken activities
on environmental performance climate change and environmental reducing GHG emissions by 619
has intensified. devastation, companies should start million metric tons and saved US$33.7
by building resiliency into business-as- billion in the process. That’s equivalent
The number of CDP Supply Chain
usual. Engaging with the entire value to shutting down 159 coal power
members asking for environmental
chain to reduce emissions, mitigate plants for a year.
transparency is up by a fifth, to more
deforestation and manage water
than 150, while 14% more suppliers But there is still a long way to
resources better must be high on any
(8,098) responded to their demand go. Despite the risks of inaction,
board’s agenda.
than in 2019. Sustainability is no companies are slow to drive change
longer a nice-to-have; it is now core Since the average company has found along the whole of the value chain.
to running any business. emissions in its supply chain more Only 37% of suppliers are engaging
than ten times as high as its direct their own suppliers on climate change.
The reasons are clear: at US
emissions, a cascade of supply chain We need to see a cascade of action.
$1.26 trillion, the environmental
action will have enormous impact
risks reported in value chains are
globally - helping build a thriving,
substantial. With major corporate
sustainable economy.
buyers facing US$120 billion in
increased costs in the next 5 years
from a subset of those environmental
risks, companies must now take
ambitious action.CDP GLOBAL SUPPLY CHAIN REPORT 2020 26
HOW TO ENGAGE YOUR SUPPLIERS
Where to start: What next:
For companies beginning their journey on For companies who are already engaging with their
supplier engagement: suppliers on environmental issues:
1 2 3 4
Ask questions Collaborate with others Set public targets for the A chain reaction
supply chain
Start asking your suppliers Supplier companies are Ask your suppliers to
to assess and report their more likely to act when Setting targets publicly engage with their own
environmental data to you requested to do so by gives buyers and suppliers suppliers. Risks and
through CDP’s disclosure multiple customers. For clarity on their climate, opportunities don’t stop
system. You cannot example, 57% of suppliers deforestation and water at tier one. By driving
manage what you haven’t disclosed on forests if security goals, and a clear disclosure requests, target-
measured. If your suppliers requested by one member shared pathway towards setting and collaboration
are regularly disclosing, and 75% disclosed when achieving them. across your suppliers’
you can pinpoint risks, asked by multiple members. values, you are future-
identify opportunities and Therefore, seek out proofing your own business.
start collaborating to build opportunities to collaborate
resiliency. with peers, investors and
other stakeholders that
influence your suppliers’
behaviours.
With US$120 billion at stake, addressing environmental Being a CDP supply chain
risks through supply chain engagement is vital for member helps you to engage
companies to be competitive and resilient in the changing your suppliers, pinpoint risks
market. Leading companies that manage and reduce and identify opportunities. Our
environmental risks in their supply chains will benefit from 150+ members worldwide are
lower costs and better reputations giving them a more
using the program to set and
competitive edge today and being more resilient for the
economy of tomorrow. Meanwhile, laggard companies achieve their science-based
risk being left behind. As the climate and ecological targets, zero-deforestation and
crisis worsens and the economy shifts, it’s essential for water security targets.
both business and society that we have a Green Recovery
from COVID-19 and build back better. Smart business Learn more and join us
procurement is key to that transition.
Sonya Bhonsle
Global Head of Value Chains, CDPCDP GLOBAL SUPPLY CHAIN REPORT 2020 27
Sector breakdown Geographical breakdown
Total risks Risks related to Country USD
increased costs
Climate Change $1,003,427,676,927 $112,282,169,838 Japan $28,552,004,721
Forests $5,076,208,799 $716,132,859 United States of America $24,512,764,942
Water $248,973,772,326 $7,640,152,719 Taiwan, Greater China $20,386,578,109
Total $1,257,477,658,052 $120,638,455,416 Mexico $14,327,200,919
Republic of Korea $6,687,838,352
France $6,205,904,066
Sector USD
Ireland $3,656,704,436
Manufacturing $64,019,282,974.87
India $3,207,286,489
Food, beverage & agriculture $16,908,243,359.86
Switzerland $2,305,700,411
Power generation $11,313,350,387.57
United Kingdom of Great Britain and $2,178,150,959
Infrastructure $10,588,539,092.69 Northern Ireland
China $1,997,570,663
Materials $5,031,488,854.52
Brazil $1,653,346,235
Services $4,480,199,065.61
Germany $864,964,628
Fossil Fuels $3,226,890,209.79
Spain $563,037,925
Retail $2,348,839,536.01
Italy $562,198,461
Transportation services $2,118,205,471.18
Colombia $543,810,676
Biotech, health care & pharma $459,942,056.63
Netherlands $458,026,519
Apparel $76,523,757.45
Canada $243,117,297
Hospitality $66,950,649.28
Finland $195,797,579
Portugal $194,854,824You can also read
