Friday, July 17, 2009

CDP and Walmart: A Tipping Point is Reached for a Common Approach Toward Green Supply Chains

CDP and Walmart: A Tipping Point is Reached for a Common Approach Toward Green Supply Chains

The announcement this week by Walmart of the Sustainability Index firmly cements the Carbon Disclosure Project (CDP), public reporting of GHG emissions, and Walmart's supplier survey questions as the first steps toward greening one's supply chain. This initial effort is not directed at product-level carbon calculation, but could be over time.

Phase 1 includes a supplier survey with 15 basic questions, including:
- Have you measured your corporate GHG emissions and reported to CDP?
- What are your total GHG emissions?
- Do you know the locations of 100% of the facilities that product your products?
Click here for a program overview and the complete list of 15 questions. The program is administered by Sustainability Consortium, a team funded by Walmart but open to all.

With 77% of the Global 500 participating, the CDP is the global standard for large companies to publicly report their GHG emissions. Participation rates have been steadily rising and firms now correctly look like laggards if they are not reporting to the CDP.

The CDP Supply Chain Project is a newer program where large companies send a survey to their top suppliers with questions on GHG emissions and sustainability efforts. Walmart has instructed its suppliers to report to the CDP.

Walmart's endorsement of the CDP Supply Chain Project and its green supplier survey has set the defacto standard for greening a supply chain (at least for less complex products) and will result in increased supplier participation rates.

Benefits of Supplier Reporting: Increasing Awareness and Assessing Supply Chain Maturity

Green supplier surveys have two main benefits. One, suppliers become increasingly aware of the benefits of sustainability when pressured to calculate their GHG emissions and articulate their sustainability plans. For numerous companies, requests from top customers like Walmart are the final impetus to fund projects to calculate GHG emissions Two, green supplier surveys assist companies in assessing the maturity of their supply chain by establishing a framework to ask the right questions about risk, cost, and flexibility.

Calculation of carbon emissions at the product-level through tools such as LCA remain important but involve much more data analysis and can be fraught with assumptions on top of assumptions. Leading firms are doing high-level LCA analyses to identify carbon reduction opportunity areas.

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