March 10, 2009 - Global suppliers, still largely unaware of the business risks of global warming, may need their biggest customers to point them in the right direction, a new report from the Carbon Disclosure Project (CDP) suggests.

CDP surveyed more than 600 suppliers to major corporations worlwide, and the results are surprising: While 58% concede that climate change poses a risk to their operations, a third say it poses no risk at all.

The survey "demonstrates the need for increased supplier awareness of the regulatory, physical and general risks that climate change poses to their business," says CDP.

Best positioned to educate suppliers on climate risk are their large corporate customers, many of whom are keen to reduce their own carbon footprint. As much as 60% of a company's total greenhouse gas emissions result from supply chain activities such as processing, packaging, and transportation, according to CDP.

"With the current lack of awareness and preparedness on climate change risk there is a clear requirement for greater collaboration with suppliers to create transparency and also encourage a willingness to improve," says Frances Way, head of supply chain at CDP. "This can only be done through long-term relationships, where ideas are shared and solutions developed in partnership. Collaboration is vital if organizations are to future proof their business."

Thirty-four companies - including Cadbury, Colgate-Palmolive, Johnson & Johnson, Juniper Networks, P&G, Unilever, and Vodafone - currently require that major suppliers report their greenhouse gas emissions using the CDP framework. Suppliers are asked for detailed information on their carbon risks and opportunities, emissions, reduction targets and plans, governance, and product lifecycles.

The report offers a few tips to help corporate customers work with suppliers on carbon management:

• Recognize that many suppliers are looking at climate change risk for the first time; start by engaging with suppliers to raise their awareness of the issue.
• Identify the areas where the greatest difference can be made in carbon reduction, to maximise efficiency.
• Clearly communicate what information is required and how it will be used.
• Obtain supplier support at board level.
• Align carbon, climate change, and procurement objectives.
• Embed carbon and climate change into overall supply chain management processes, rather than treating it as an add-on to traditional procurement processes.

Download CDP's "Supply Chain Report 2009" here (PDF).