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Survey finds nearly one-fourth of organizations targeting supply chain emissions

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Survey finds nearly one-fourth of organizations targeting supply chain emissions

About one-quarter of more than 4,800 companies and organizations around the globe say they are targeting supply chain-related emissions, the nonprofit group CDP said in a new report.

The Jan. 29 report by the CDP, formerly the Carbon Disclosure Project, surveyed 4,858 organizations across several industries, including the energy, financial, telecommunications, technology, retail and health sectors, and found that only 23% of those entities are working with suppliers to reduce emissions. The group promotes the disclosure of environmental impacts by gathering data from companies, regions and countries and helps those entities and investors track emissions and other environment-related activities.

Among the 99 organizations that engaged their suppliers through the CDP in 2017 were Bank of America Corp., Barclays Plc, Virgin Money Plc, Microsoft Corp., Novartis AG, Dell Inc., NRG Energy Inc., National Grid plc, CSX Corp, PepsiCo Inc., Wal-Mart Stores Inc. and Mastercard Inc.

The CDP said greenhouse gas emissions in supply chains can on average be four times those of some companies' emissions from direct operations. Trucost reported earlier in January that supply chain-related emissions can pose a financial risk to companies in the context of efforts to meet the Paris Agreement on climate change's goals of limiting global warming to 2 degrees C.

"If you are only addressing your own operations, I think you are only covering the tip of the iceberg," Dexter Galvin, the CDP's global director of corporates and supply chains, said in an interview.

The U.S. in 2017 saw 16 extreme weather and climate-related disasters with losses exceeding $1 billion and a total cost of about $306 billion — the costliest year on record for the nation, according to the federal government's National Centers for Environmental Information. The next-costliest year on record was in 2005, with $215 billion in costs driven in large part by hurricanes Katrina, Wilma and Rita.

Investors and others are pushing companies in the U.S. and globally to disclose more of their financial risks associated with their emissions and climate change and to address long-term sustainability using environmental, social and governance, or ESG, criteria. But that push has not historically focused on supply chain-related emissions, Galvin said.

As a result, "many companies have for years been effectively outsourcing their emissions to their supply chains," he said.

President Donald Trump has called climate change a hoax perpetrated by the Chinese and has pledged to withdraw the U.S. from the Paris accord. But a growing number of businesses, cities and states in the U.S. have said they will continue to pursue the accord's goals.

The CDP reported that 76% of entities have identified inherent climate risks to their business and 52% say they have integrated climate change into their strategy. About 21% of the organizations said they plan to set targets in line with, or stricter than, the Paris accord within two years.

Of the companies that filled out the survey, total overall emissions reductions in 2017 increased to 551 million tonnes of carbon dioxide, representing about $14 billion in cost savings. Organizations reported 434 million tonnes in CO2 reductions in 2016.

Trucost is a part of S&P Dow Jones Indices, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.