New Delhi [India], September 15 (ANI/Mediawire): In the aftermath of the COVID-19 pandemic, it has become more important than ever to strengthen the resilience of corporate supply chains. Globally, there is a need to diversify supply chains in the medium-to-long term and identify the opportunity to attract Indian companies for whom supply chain relocation has become an immediate priority.
As one of the fastest-growing economies in the world and 5th largest overall, India is well positioned to emerge as a global economic hub. Specifically, with the country slated to grow by 7.2 per cent for FY 2022-23, increased procurement spending by businesses is inevitable. Growth if not planned and guided by sustainability principles would exert more pressure on the environment to provide resources and raw materials. This is where the need for sustainable supply chains emerges.
CDP places high importance to value chain engagement. This is evident from the fact that all 3 questionnaires capture information on how companies work with suppliers and other partners in the value chain to address environmental issues. In addition, CDP has a dedicated Supply Chain program which specifically works toward helping companies towards decarbonising its value chain.
In 2021, despite the continued economic disruption from COVID-19, CDP received a record number of environmental disclosures. 11,457 individual suppliers responded to CDP's questionnaires, including 5,285 SMEs, resulting in an overall growth of 41 per cent compared to 2020. This increase is linked to companies facing more pressure for greater environmental transparency from their customers and other stakeholders. According to the CDP's 2021 report, over 200 member organizations with US$5.5 trillion in annual procurement spending, have requested suppliers to report their environmental information on their current and future risks and opportunities from climate change, water, and deforestation.
According to CDP India Director, Prarthana Borah, "Setting company-wide emission reduction targets and delivering against them requires one to fully understand the environmental impact of the company's economic activity, define the reporting boundary and look beyond its direct emissions and risks. The entire value chain must be extensively engaged for managing and improving its environmental performance since addressing global issues like climate change requires collective effort at scale"
CDP's disclosure data reveals that on an average value chain emissions are about 11.4 times greater than the company's direct carbon footprint. Enterprises must play an active role in transforming the industry by helping their value chain partners implement sustainability strategies internally. Companies must also think strategically to identify critical suppliers based on procurement spend and emissions levels to prioritise the value chain partners.
There are almost 8 million MSMEs in India and represent a large share of a company's supplier base. These suppliers and vendors lack the necessary resources for environmental data collection and absence of skilled human resources in these companies further compounds the problem. "Engagement with the supply chain in a country like India gives larger corporates an opportunity to engage with smaller procurement industry as well as consumers to set and example and provide for transfer of knowledge and technology which is otherwise not accessible for the MSME sector which forms a large segment of the supply chain, adds Prarthana Borah, India Director, CDP "This can also reduce the need for prioritising cheap procurement over sustainable procurement since companies can be involved in the transition journey of their supply chain companies and prevent long-term repercussions in the form of regulatory and reputational risks" Borah adds.
CDP's Supply Chain program, provides corporates with a platform through which they can engage their suppliers on environmental management. Member organisations (customer) would be able to use the data of the suppliers responding to CDP's questionnaires and make informed procurement decisions from a sustainability lens. They would get an insight on the level of risk they are exposed to and what their suppliers are doing to manage and reduce the impact. This exercise would also enable customers to measure their scope 3 emissions more effectively once suppliers allocate emissions to them. Moreover, the program offers capacity building workshops to suppliers new to environmental reporting, learn from best practices through benchmarking against peers and leverage CDP's resources to strengthen climate action.
In 2022, 3 Indian corporates- Wipro, Adani Green Energy and Adani Transmissions Ltd., have onboarded the journey with CDP India for engaging their supply chain through this program. Ekinath Khedekar, Manager,Global Supplier Diversity & Sustainable Procurement from Wipro comments on the value of the supply chain engagement "Wipro is happy to be part of the CDP Supply Chain program - o ne of the key programs contributing to our Net Zero strategy. It has helped us engage with our major contributing suppliers in a short period of time. As more organisations engage with their value chain partners on climate change through CDP, we hope that understanding and the quality of engagement will significantly improve."
These companies are a blueprint for other organisations striving to tackle climate change more proactively and hopefully more businesses will follow suit. The Supply Chain program increases the customer relationship value through collaborative opportunities, allows corporate members to set meaningful emission targets and most importantly helps achieve a resource secure future for all.
"By using the CDP platform, Adani Transmission Ltd and Adani Green Energy are connecting with strategic suppliers on climate change. We want to see our suppliers matching our ambitions, setting emissions reduction targets and report progress towards achieving them. GHG emissions reduction can drive innovation and enable cost optimisation resulting in win-win situation for all" said Praveen Anant, Chief Sustainability Officer from Adani Enterprises Ltd Green PVC Business & Adani Transmission Ltd.
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