Greenhouse gas emissions equal to those of Brazil and Mexico could be saved if the proportion of electricity sourced from renewables in supply chains increased by 20%.
That is according to a CDP report published yesterday at the COP 25 climate summit, which analyses environmental data from almost 7,000 suppliers to the world's 125 biggest corporate purchasers.
Renewables are responsible for 11% of these suppliers' total electricity on average, and the researchers estimate that increasing this to 31% would cut a gigaton of emissions in one year.
For comparison, global emissions from energy increased by a gigaton between 2017 and 2018, with those from suppliers thought to be 5.5 times as high as direct emissions from corporates.
“This makes the trillions in procurement spend by large corporate buyers a critical leverage tool for driving climate action at scale, said CDP global director of supply chains, Sonya Bhonsle.
However, the report also shows that just 4% of the suppliers analysed reported a renewable energy target in 2019.
In response, 31 corporate buyers are now actively engaging with their suppliers to source more renewable energy, including Accenture, the BT Group and AB InBev, the LEGO Group and Signify.
These five companies have all committed to source 100% renewable electricity in their own operations by joining the RE100 initiative, and are taking steps to boost renewables in their supply chains.
The report also reveals that suppliers have reported $1trn of potential financial impacts from environmental risks, including $906bn from climate change, $78bn from water security, and $16bn from deforestation.
Moreover, 95% of large buyers, representing $1.9trn of purchasing power, believe that suppliers demonstrating environmental leadership make better business partners.
Suppliers just starting out should sign their first renewable electricity contract aiming to source at least 20% of their total power, Bhonsle continued.
Meanwhile, corporations should be rewarding suppliers taking this action in their procurement processes, making renewable energy a matter of business competitiveness.“
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