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Supply Chain & Logistics: Manufacturers Are Spending Less Green to Go Green

Ninety percent of manufacturers say that regulatory uncertainty is making them skittish about investing in sustainability programs.

Manufacturers have clearly gotten the message that carbon reduction is not only good for the environment, but good for business as well, particularly when it comes to recognizing risk within their supply chains. And yet, somewhat paradoxically, while more companies than ever are now disclosing the results of their emissions reduction programs, investment in these programs is actually going down.

One of the reasons for this backtracking, according to new research from the Carbon Disclosure Project (CDP) and global consulting firm Accenture, is that average monetary savings from emissions reductions efforts have fallen 44% in the past year. Another reason is that 90% of the companies surveyed say that regulatory uncertainty is making them skittish about investing in sustainability programs. As a result, projects tend to be more short-term in focus.

"Businesses want to leverage their relationships with their suppliers to realize opportunities and minimize climate and water related risks," points out Paul Simpson, CEO of CDP. "When governments introduce a more realistic global price on carbon, we expect significantly more investment in emissions reductions from corporates."

See Also: Lean Supply Chain Logistics Best Practices

Collaboration across the supply chain is seen as key to driving improved carbon reduction performance, according to the research. For instance, companies that engage with two or more supply chain partners are more than twice as likely to see a financial return from their emissions reduction investments and to reduce emissions.

"Those who are most transparent about their climate change risks are more likely to achieve the greatest emissions reductions, and they are also more likely to enjoy monetary savings as a result of their responses to climate change risks," says Gary Hanifan, Accenture's global sustainability lead for supply chain. "But the return on investment by the most proactive companies will not reach its full potential unless those companies can encourage their suppliers to follow their lead."

The research is based on information from more than 2,800 companies, which among them produced 14% of 2013's global industrial emissions.

TAGS: Supply Chain
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