Companies are increasingly recognizing climate risk in their supply chains, but investment in emissions reductions programs is going down, according to research published today by CDP and Accenture (NYSE:ACN). Importantly, a clear link is established between stalling progress on emissions reductions within supply chains and the uncertain regulatory framework.
According to the report, “ Collaborative Action on Climate Risk,” ever more companies are reporting on their emissions reductions programs and there are clear financial benefits from investment in sustainability measures. However, average monetary savings from emissions reductions efforts have fallen 44 percent in the past 12 months. The report points to an ever widening gap – highlighted last year – between measures taken by large corporates who are members of CDP’s supply chain program and those by suppliers.
The research is based on information from 2,868 companies including some of the world’s largest corporates, reflecting a rise in participation of more than a fifth since last year. These produced 14 percent of 2013’s global industrial emissions 1. The 64 CDP supply chain members behind the request to this supply chain represent a combined annual spending power of almost US$1.15 trillion.
Almost three quarters of companies identified a current or future risk related to climate change, according to the report, while 56 percent of companies said that consumers are becoming more receptive to low-carbon products and services. Regulatory uncertainty is making companies cautious about investing in emissions reductions and supply chain sustainability. Ninety percent of companies that identify a current or future risk cited regulatory risk as a barrier to investment.Investment in emissions reductions programs has declined in the past year and is shorter term in focus, according to respondents. Seven out of 10 sectors report investment falling from earlier years. Shorter pay-back initiatives (less than three years) are on the rise with these almost doubling between 2011 and 2013. The average sum invested per reporting company has dropped 22 percent since last year.