Don’t run the green light

Next November, Paris wild be hosting the COP21, the Conference of the Parties to the United Nation Framework Convention on Climate Change. Once again the World will be working on new international agreements to contain global warming. Hopefully, this climate change submit will come up with an agenda of solutions. Climate change should matter a great deal to companies given the number of potential constraints which can be placed upon all aspects of their business.

Supply chains actors are important stakeholders. If some of their practices are often disparaged, they ultimately remain the most concerned due to their exposure. Indeed, if extensive trade causes emissions, emissions increases supply chain risk both internal and external. For example, we should recall the impact of the 2011 Tsunami on automotive manufacturers. Toyota had its factories shut for a month, Renault-Nissan had problems with 40 of its suppliers, and GM suspended a production facility in the US due to a disruption of supply. As for the floods in Thailand in 2011, estimates amount that 14,000 factories were impacted and that a company like Sony would have faced a loss of up to 230 million euro.

Let’s take this opportunity to have a closer look at goals the supply chain world has set to target and mitigate Green House Gas (GHG).

Some early movers have taken climate into consideration and much is being done. Among them figures Alcatel-Lucent that started to survey its suppliers in 2010 or Dell that join the Electronic Industry Citizenship Coalition (EICC) Carbon Reporting System. However, if some precursors took an early interest at the environment cause, some have decided to ignore the question. A study by the Climate Accountability Institute revealed that “63 % of cumulative worldwide emissions of industrial CO2 and methane between 1751 and 2010” is caused by 90 major companies and these companies are not showing particular willpower to reduce their emissions. Moreover, the number of organisations collaborating through the Carbon Disclosure Project’s (CDP’s) Supply Chain Program, a non-for-profit organization that gathers GHG emissions data, remains relatively low, only 75 companies are mentioned.

In parallel, the most widely used international accounting tool to manage GHG emissions the World Resources put together by the Institute (WRI) and World Business Council for Sustainable Development (WBCSD) Greenhouse Gas Protocol (GHG Protocol) does not meet with unanimous approval.

Finally, if most companies boast publically about their sustainable practices on their website and more and more of them disclose their environmental impacts as well as their in suppliers’, the disclosure remains partial. For example, scope 2 and 3 that gathers indirect emissions are not realised or only estimates are provided. This partial disclosure biases possible ranking and penalise companies that advocate transparency.

So, in spite of growing awareness and the multiple governmental and non-governmental structures available to assist companies,  there is a lack of unity for standards and labels to measure and certify GHG emissions and therefore to allow comparisons. There is an environmental imperative, with upcoming legally binding climate change targets, in providing unified standards, guidance and in setting strict goals to companies for tracking GHG. Authorities need to help raise the level of expectations and favour the emergence of independent third parties.  Without these, future climate conferences risk to be not taken seriously and assimilated as international garden parties.