Seventy percent of companies believe that climate change has the potential to significantly affect their revenue, a risk which is intensified by a chasm between the sustainable business practices of multinational corporations and their suppliers, according to research published today by the Carbon Disclosure Project (CDP) and Accenture (NYSE:ACN).
“ Reducing risk and driving business value ” is based on information from 2,415 companies, including 2,363 suppliers and 52 major purchasing organizations who are CDP Supply Chain program members. These members include Dell, L’Oreal and Walmart, and they represent a combined spending power of US$1 trillion. The research marks CDP Supply Chain’s most comprehensive annual update on the impact of climate change on corporate supply chains.
Climate change presents near-term risks to businesses, according to the report. Fifty-one percent of the risks that disclosing companies associate with drought or extreme rain are already having an adverse effect on company operations, or are expected to within five years, say those businesses. Additionally, the destructive nature of extreme weather is likely a catalyst for company action on climate change, with physical climate risk identified in the report as a greater driver of investment than climate policy. Of the 678 companies investing in emissions reduction initiatives, three quarters (73 percent) say they feel that climate change presents a physical risk to their operations; just 13 percent identify regulation as a sole driver.
Most of the positive actions responding companies say they have taken in response to climate change are attributable to organizations that have been using CDP’s unique global system for at least two years, demonstrating that customer pressure is driving change. However, the report identifies a performance gap between companies and their suppliers, and it claims that this is intensifying climate risk in the global supply chain models.