Big Companies Pilot Project to Measure Supply Carbon Footprints

The Carbon Disclosure Project (CDP), a collaboration of more than 315 institutional investors, including Goldman Sachs, Merrill Lynch, Allianz and HSBC, with assets under management of more than $41 trillion, is working with some of the world’s largest companies to help them measure their emissions through their supply chains.

CDP has teamed up with some of the largest purchasing global organizations under the CDP Supply Chain Leadership Collaboration. New corporate members include Dell, HP, L’Oreal, PepsiCo, and Reckitt Benckiser. They join original members Cadbury Schweppes, Imperial Tobacco, Nestle, Procter & Gamble, Tesco and Unilever, which were announced in October 2007. CDP is working with these global companies and their suppliers to create one single standardized information request to elicit key climate change information throughout their supply chains.

Each member of the collaboration has selected up to 50 suppliers to work with them and to respond to the CDP pilot information request in the first quarter of 2008. The results of the pilot will refine the process in preparation for the roll out and will help customers and suppliers work together to develop strategies to reduce their carbon footprints. Some members will work with suppliers at the national level, others will work internationally.

The project will be rolled out in May, and CDP is inviting more companies to join the collaboration. This will broaden both the geographical and sectoral scope – and potentially bring tens of thousands of new suppliers into the CDP process and extend disclosure globally. A report will be produced on the findings.

“The Supply Chain Leadership Collaboration is a key step toward a unified business approach to climate change," said Paul Dickinson, CEO of CDP. "By bringing together the purchasing authority of some of the largest companies in the world, CDP will encourage suppliers to measure and manage their greenhouse gas emissions. This will enable large companies to work toward managing their total carbon footprint, as the first step to reducing the total carbon footprint is to measure its size.”

The CDP information request elicits detailed information on companies’ supply chains. It encourages suppliers to report carbon footprints and climate change-relevant information, such as greenhouse gas emissions data, emissions reduction targets and climate change strategy. This is the first scheme that allows corporations to measure the emissions through their supply chain using one single standardized mechanism. This will decrease the burden on suppliers who might otherwise receive several separate requests for similar information.

Key sectors represented in member supply chains include agriculture, transportation, buildings management, packaging and electronic components. This is the first time CDP will request climate change relevant information from private companies and Small and Medium Enterprises (SMEs) and the collaboration will bring some of the world’s largest privately owned companies into the system. It also is an important step to moving the CDP process into China, where many suppliers to large multinationals are based.

“For decades, HP’s Design for Environment Program has focused on innovation, reducing environmental impacts and responsible practices in product development, operations and supply chain," said Pat Tiernan, vice president, Social and Environmental Responsibility at HP. "We joined the CDP Supply Chain Leadership Collaboration project to help develop a consistent and appropriate methodology for reporting energy use and carbon emissions throughout the supply chain.”

“Participating in the CDP Supply Chain Leadership Collaboration is one of the steps that will help P&G achieve its new 5-year sustainability goals, which include improving the environmental profile of our products across their lifecycles," said Peter White, P&G director of Global Sustainability.

CDP is an independent, not-for-profit organization established in 2000 to facilitate dialogue between companies and investors, supported by quality information, from which a rational response to climate change will emerge. The Carbon Disclosure Project is a special project of Rockefeller Philanthropy Advisors in New York, with 501(c)3 charitable status.

Institutional Investors use CDP data to feed into investment products as well as to inform their lending decisions. Investors also identify companies in their portfolios with both high quality and poor carbon disclosure practice and some file shareholder resolutions for better disclosure on climate risk from companies not complying with CDP disclosure.

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