Why Engage Suppliers on GHG Emissions?
Alignment with Sustainability Commitment
As organizations commit to reduce the carbon footprints of the products and services they provide, they look to their suppliers to align their efforts with the organization's sustainability goals. Some organizations have GHG goals that explicitly include supply chain reductions.
Risk Mitigation
Association with less environmentally sustainable suppliers can undermine the credibility of organizations interested in differentiating their brands through environmental leadership. To protect their brands, organizations seek relationships with suppliers that "walk the walk" alongside them by taking steps to be proactive environmental stewards.
Organizations also seek to insulate their supply chains from sudden spikes in energy and fuel prices, which may in turn affect the prices and availability of goods and services they procure from suppliers. With this aim in mind, leading organizations are beginning to work with suppliers to ensure that they become more energy efficient, especially for emissions-intensive processes.
Demand from Customers and Consumers
Increasingly, customers and stakeholders are asking organizations to provide information on the life cycle emissions of the products and services that they procure. Organizations therefore need information on scope 3 emissions1 from suppliers to provide customers and stakeholders with a more complete picture of organizational emissions performance across the value chain. Shareholder concerns are also reflected in the Securities and Exchange Commission's guidance about corporate reporting on climate change risk management.
1Scope 3 emissions include indirect GHG emissions from sources not owned or directly controlled by the reporting agency but related to the agency's activities.