Companies are falling behind on tracking supply chain emissions and risk missing forthcoming regulations on nature, according to a leading global disclosure platform.
Last December’s COP15 agreement urged countries to encourage and enable all large companies and financial institutions to take measures by 2030 on their risks, dependencies and impacts on biodiversity in their operations, supply chains and portfolios.
CDP, a non-profit that supports companies, cities, states and regions to measure and manage environment-related risks and opportunities, revealed a 42% increase in firms reporting through its climate platform. However, only 41% are reporting on any of their supply chain emissions despite their impact exceeding direct emissions by more than 11 times.
The organisation’s report Scoping out: Tracking nature across the supply chain reveals that nearly 70% of companies do not assess the impact of their value chains on biodiversity despite fast-approaching mandatory regulations on nature. Across the 18,600 companies disclosing to CDP in 2022, more than 7,000 engaged their suppliers on climate change, compared with 915 on water and just over 500 on forests. The report shows that 70% of senior management teams are not incentivised to act on deforestation before 2025, while only 3% of companies have water-related incentivisation for their chief procurement officers.
“If a company is not preparing for future regulations on nature in the supply chain, they are open to a wide range of risks and could also be missing out on the opportunities that safeguarding nature will bring,” said CDP global head of value chains Sonya Bhonsle.
“Quite simply, if a company wants to be in business in the future, they need to start embedding nature into the way that they buy and collaborating with suppliers to drive action in the supply chain.”