Ernst & Young report identifies climate change and sustainability risks

Regardless of the outcomes of the United Nations Framework Convention on Climate Change (COP 16) in Cancun, Mexico this month, businesses face increasing pressure to identify environmentally-sound alternatives for managing operations risks, particularly when it comes to the supply chain.

“Supply chain and environmental professionals share a common goal: to reduce waste,” said Steve Starbuck, Americas Leader, Climate Change and Sustainability Services, Ernst & Young LLP. “While these supplier programs could be seen as a burden, they are actually great opportunities to cut costs while reducing an organization’s environmental footprint. The risks –- once identified and managed for an individual organization –- can help foster customer relationships and yield competitive advantages.”

The statement came following the announcement by a report that identifies five highly charged climate change and sustainability risks that executives should consider as they respond to growing demand to eliminate waste from their supply chains and to report on these initiatives.

As reported in SCMR, a similar conclusion was signaled at the BSR conference in New York last month. In its session, “Closing the Loop: Minimizing Product Life-Cycle Impacts,” analysts noted that corporations are focusing on product stewardship, before the government does.

According to Ernst & Young, the demand comes from a proliferation of large corporate supplier qualification and scorecard programs that are employed to examine carbon footprints and resource use at every step of the product and service lifecycle - from the sourcing of raw materials to waste disposal by customers. In addition to commercial customers, consumers, investors, analysts and other stakeholders are demanding transparent information about the lifecycle of products and services.

Government engagement is also motivating corporate focus on greening the supply chain. In November, the U.S. government – the largest supply chain in the country – announced its GreenGov Supply Chain Partnership, a pilot program to cut waste and pollution in the federal supply chain by measuring greenhouse gas emissions (GHG). Following this pilot, the General Services Administration intends to develop an incentive-based approach to contracting to favor companies that track and disclose their GHGs.

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