DISCLOSURE INSIGHT ACTIONENGAGING THE CHAIN:DRIVING SPEED AND SCALE
CDP Global Supply Chain Report 2021
FEBRUARY 2022

Written in collaboration with
Boston Consulting GroupCDP GLOBAL SUPPLY CHAIN REPORT 2021

2

FOREWORD
At L’Oréal, our purpose is to create
the beauty that moves the world. Thismeans that achieving our social andenvironmental commitments is a
critical measure of success. As the
Global leader in our industry, we havea responsibility to leverage our global
footprint and proactively invest in
finding a solution to these issues.

Nicolas Hieronimus
CEO
L’Oréal
We are living through a pivotal
moment and our actions this decade
will shape the course of the futureof humanity. Global warming andenvironmental changes have thepotential to permanently degrade
human and natural habitats, deplete
our natural resources, and create amore unstable world.
Planetary boundaries provide us witha quantitative framework within whichhumanity can continue to develop
and thrive for generations to come.
Crossing these boundaries increases
the risk of generating large-scale
abrupt or irreversible environmental
changes. It is no longer enough forcompanies to set environmental
impact reduction goals that are notbased on science. It is critical that
we prepare for the world of tomorrowand that business and society arecommitted to addressing thesepressing challenges. In this context,
CDP plays a critical role in providing
a transparent and science-based
disclosure system which allows
companies and cities to monitor the
progress they achieve in reducing
their environmental impact.

That’s why we have pledged toensuring that our activities arerespectful of planetary boundaries,
as defined by environmental science,and to reconciling our needs with thepreservation of a resource-limited
planet. To do this, we are raising thebar and have set ambitious targets
towards 2030, that tackle both ourdirect and indirect, extended impacts.
With our sustainable program “L’Oréal
for the Future”, we are committed totransforming ourselves, empowering
our business ecosystem, to help
solve some of the most pressing
challenges of the world. Our strong
and stable financial model is criticalin enabling us to make the investment
choices needed to effect change andmeet these goals.
Because we have a social andenvironmental impact beyond ouroperations, we are committed toactively supporting our business
partners to improve their socialand environmental performance.
Alongside our own sustainablecommitments, we are working
with our strategic suppliers so thatby 2030, they reduce their directemissions (scopes 1 and 2) by 50%
in absolute terms compared to 2016.
We are also working with them sothat they use water sustainably in theareas where they operate.
To gain transparency into theiractions and track progress with our
supplier goals, in 2007 L’Oréal joined

the CDP Supply Chain program.
In 2014, we made participation to
CDP mandatory for all our strategic
suppliers. This allows them tomeasure and report their carbon
emissions reductions and tocommunicate on their action plansto achieve their targets. In 2021, 75%of our strategic suppliers responded
to CDP’s climate, water, and/or forest
questionnaires, providing us withinvaluable insight and data on theiractions.
As part of our disclosure
requirements, we are continuously
engaging our suppliers onsustainability issues and the role
they play. Last year, we hosted virtual
working sessions dedicated tosustainability, known as “Spread theGreen Vibes”, with over 800 suppliers
participating. Our Chief Purchasing
Officer, the Chief Corporate
Responsibility Officer, and theGroup’s Environment Director hosted
two global webinars about suppliers’
contribution to L’Oréal Science-Based
Targets and the L’Oréal for the Future
program. We have also strengthened
our engagement partnershipwith CDP with the objective of
implementing a ‘test and learn’approach with new initiatives tostrengthen supplier engagement andshare best practices.
As environmental and social
concerns increase, we know that ouractions alone are insufficient. Thisis a global emergency. Together, wehave one decade to act. By sharing
our story, we hope to be a catalystof change in the beauty sector andbeyond, and to inspire others to act
with us.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

3

EXECUTIVE SUMMARY
A company’s supply chain is
responsible for substantial
environmental impacts. Last year,
CDP found that GHG emissions in
a company’s supply chain are, on
average, 11.4 times higher than its
operational emissions.
This chain of environmental risk is
not just an opportunity to look beyond
companies’ own emissions andcascade their ambition; it is now the
only way to leverage change at thescale required. This report explores
the environmental impact caused bysupply chains and the actions buyers
are taking to reduce them.

231
milliontons CO2e of emissions reduction
initiatives were driven last year byover 200 Supply Chain members,
suppliers reported.

This year, over 11,000 companies
submitted environmental data to
CDP. The results show moderateaction on measuring and tacklingenvironmental impacts resulting fromdirect operations. On climate change,
75% of suppliers reported their Scope
1 and 2 emissions and took actions to
reduce these emissions by a total of
231 million tons CO2e.
However, suppliers must thinkbeyond climate change alone. Harmto the environment encompasses
deforestation and water scarcity,
but this realization is not widelyreflected in the reported data acrossthemes. Many suppliers that operate
in water-stressed areas – or source
forest commodities in high-risk
regions – are unable to report any dataon their water withdrawals or volumesof production and consumption offorest commodities. As emphasized
at COP26, stand-alone actions are notsufficient. Environmental issues areinterconnected; companies cannot
meet their climate net-zero targets
whilst generating mass deforestationin their supply chain.
High-performing companies inthis area ask suppliers to report
data and set targets to reduce their
upstream Scope 3 emissions. A
growing number of organizations,such as the 207 CDP Supply Chain
members and companies on the SER
Leaderboard, are trailblazing a path
to truly meaningful reductions inharm to the environment. However,they are currently in the minority.
Ambitious environmental action is
not yet cascading down the supply
chain. Alongside insufficient tracking,
CDP data also illustrates a lack ofengagement with suppliers. For
example, on climate change, only 20%
reported data for Scope 3 category
1 ‘Purchased Goods and Services’emissions, and 62% aren’t engaging
suppliers on the topic.

Suppliers that disclosed in 2021 and actively engage with suppliers on each theme:

38%

Climate change

47%
Forests**downstream companies (traders, manufacturers,
retailers) working beyond their first-tier suppliers tomanage and mitigate deforestation risks.

16%

Water security

CDP GLOBAL SUPPLY CHAIN REPORT 2021

11.4x

times more emissions in acompany’s supply chain compared
to its own direct operations

11,000+4

Put simply, companies are not making
the necessary transformationalchanges to truly drive action at
the required scale. A continuously
increasing number of organizations
set environmental targets - however,they are often not aligned withclimate science and 1.5°C reduction
pathways. Less than 5% of suppliers
reported that they put in motion
climate transition plans.
But, there is hope. Our data
demonstrates that engaging
suppliers on the environment does
drive change. This year’s data shows

companies show moderateaction on measuring and tacklingenvironmental impacts resulting
from direct operations

200+

that consistent engagement frompurchasers creates momentum in
key areas. For instance, leveraging
influence from the top downwards
speeds up the rate of change. CDP’s‘Sustainable Procurement Pathway’,
co-developed by Boston Consulting
Group (BCG), is a scalable approachto help kickstart this process. If weare to meet the environmental crisis
and avert climate change, everyone
must act now. The key finding in thisreport is that corporate buyers havethe ability to make change happen at
the required scale and speed - if they
start their journey now.

US$5.5 TN

CDP Supply Chain
members

Combined procurement spend of
Supply Chain members

11,457suppliers disclosed
in 2021

suppliers were requested todisclose through CDP in 2021

500+

Companies on CDP's
Supplier Engagement
Rating Leaderboard

23,487

Total (unique disclosing suppliers) per theme

11,418

ClimateForests

Water

548
2,726

Response rate (unique disclosing suppliers) per theme

49%
Climate67%
Forests**downstream companies (traders, manufacturers,
retailers) working beyond their first-tier suppliers tomanage and mitigate deforestation risks.

62%
Water

CDP GLOBAL SUPPLY CHAIN REPORT 2021

5

CONTENTS
Executive summary

03

Measurement

09

Ambition

13

Action17

Transformation

20

Accelerate the speed and scale

23

The future of supply chain action

28

Acknowledgements

31

Important Notice
The contents of this report may be used by anyone
providing acknowledgment is given to CDP. This does
not represent a license to repackage or resell any ofthe data reported to CDP or the contributing authors
and presented in this report. If you intend to repackage
or resell any of the contents of this report, you need toobtain express permission from CDP before doing so.
CDP has prepared the data and analysis in this reportbased on responses to the CDP 2021 information
request. No representation or warranty (express
or implied) is given by CDP as to the accuracy orcompleteness of the information and opinions containedin this report. You should not act upon the information
contained in this publication without obtaining specificprofessional advice. To the extent permitted by law, CDP
does not accept or assume any liability, responsibility or
duty of care for any consequences of you or anyone else
acting, or refraining to act, in reliance on the information
contained in this report or for any decision based on it.
All information and views expressed herein by CDP arebased on their judgment at the time of this report andare subject to change without notice due to economic,
political, industry and firm-specific factors. Guest
commentaries where included in this report reflect theviews of their respective authors; their inclusion is not anendorsement of them.
CDP, their affiliated member firms or companies, or theirrespective shareholders, members, partners, principals,

directors, officers and / or employees, may have aposition in the securities of the companies discussed
herein. The securities of the companies mentioned inthis document may not be eligible for sale in some states
or countries, nor suitable for all types of investors; theirvalue and the income they produce may fluctuate and/or
be adversely affected by exchange rates.
‘CDP’ refers to CDP North America, Inc, a not–for-profit
organization with 501(c)3 charitable status in the US and
CDP Worldwide, a registered charity number 1122330
and a company limited by guarantee, registered inEngland number 05013650.
© 2022 CDP. All rights reserved.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

6

ABOUT THIS REPORTThis report has been written by CDP incollaboration with Boston Consulting
Group (BCG), using CDP’s Supply Chain
program data submissions to evaluate
the activities of reporting organizations
as a group, and to identify meaningful
insights about the supply chain
impacts on setting science-basedtargets, zero-deforestation and water
security targets.
The CDP Supply Chain program,
representing over 200 member
organizations with US$5.5 trillion in
annual procurement spend, requested
that suppliers report to memberson their current and future risks
and opportunities related to theseenvironmental issues.

Suppliers responded to standardized
questionnaires on climate change,
forests and water security: a fullversion or a simplified version madeavailable for organizations with anannual turnover of less than US$250
million or €250 million, which canalso be used by larger organizations
disclosing for the first time. In total
23,487 companies were invited toparticipate, with over 11,457 unique
responses received.

and water issues, as these are
more nascent additions to the CDP
Supply Chain program. The Forests
questionnaire, introduced in 2017,
was sent to 822 companies with 548
completing the questionnaire. The
Water questionnaire, introduced in2013, was sent to 4,427 companies
with 2,726 completing thequestionnaire. The analysis in thisreport is representative of the CDP
Supply Chain program data only.

Most respondents provided
information on climate change, with
23,441 being requested to discloseand 11,418 disclosing suppliers.
A smaller number of businesses
were asked to respond on forests

During the preparation of theanalysis by CDP, responses havebeen assessed, and a small numberof outlier data points have been
manually excluded to avoid reporting
misleading statistics.

CDP Supply Chain members
Premium members
L’OréalMicrosoft Corporation
Stanley Black & Decker, Inc.
Walmart, Inc.

Lead members

{{{
{{
{
{{

Ahold Delhaize
Alphabet, Inc.
AstraZeneca
Bank of America
Barclays
Bayer AG
Dell Inc.
Deloitte Touche Tohmatsu
LimitedElectrolux{{{

Climate change member
Forests member
Water security member

{
{{
{
{
{
{
{{
{

{{
Estée Lauder Companies Inc.
{
Flex Ltd.
{
Goldman Sachs Group Inc.
{
Grupo Bimbo, S.A.B. de C.V.
{{
GSMA
{
Imperial Brands{{
J Sainsbury plc{{{
Johnson & Johnson{{
JT International SA{{

Juniper Networks, Inc.

{{
Koninklijke Philips NV{{
LinkedIn Corp.
{{
McDonald’s Corporation{{
NIKE Inc.
{
Nordstrom, Inc.
{
NRG Energy Inc{Ørsted{Phoenix Group Holdings{
PayPal Holdings Inc{
Schlumberger Limited{Signify N.V.
{
Target Corporation{
The Coca-Cola Company{{
The Dow Chemical Company{
The LEGO Group{{{
Virgin Money UK Plc{
Wells Fargo{

CDP GLOBAL SUPPLY CHAIN REPORT 2021

7

CDP Supply Chain members (continued)
Standard members
HSBC Holdings Plc{

BT Group{

Fluence Energy

Accenture{

Caesars Entertainment{

Ford Motor Company

{{

Accor

{

Caixa Econômica Federal{{

Fujian Sunner Group{

Acer Inc.

{CANPACK Group{

Fujitsu Limited{{

Advance Auto Parts Inc{

Capital One Financial{

General Motors Company{{

Aguas Andinas SA{

CBRE Group, Inc.

{

Givaudan SA{{AIB Group Plc{

Cellnex Telecom SA{

Grupo CCR{

Airbus SE{

Cementir Holding NV

{

{

{{

Chunghwa Telecom{

Hewlett Packard EnterpriseCompany{{{

CIA ULTRAGAZ S/A{{

HMD Global Oy{

Ambev S.A{

Cisco Systems, Inc.

{{

Amdocs Ltd{

Citrix Systems{{{

Clorox Company{{{{

CNH Industrial NV{

Ajinomoto Co. Inc.
Altria Group, Inc.

Anheuser Busch InBev
Arcos Dorados
ARKEMA{

Colgate Palmolive Company

Arm Ltd.

{

AT&T Inc.

{{

Compagnie Financière
Richemont SA

Autodesk, Inc.

{

Coop Danmark A/S{

Avery Dennison Corporation{

CSX Corporation

Avianca Group{

Banco Bradesco S/A{

Banco do Brasil S/A{{

Banco Santander Brasil{

Bank of Montreal{

Blue Shield of California Group{BMW AG
Braskem S/ABristol-Myers Squibb
British American Tobacco

{{
{{
{
{{

{{

Honda Motor Co., Ltd.
Honda North America, Inc.
HP Inc.

{

{{
{
{{

Husqvarna AB{Intel Corporation{{

International Flavors &Fragrances Inc.

{

International Paper
Company{{

Iochpe-Maxion SA{

CVS Health{

Itaú Unibanco Holding S.A.

{

Daimler AG{

Jacobs{Deutsche Telekom AG{

Jaguar Land Rover Ltd{{

Diageo Plc{{

KAO Corporation{{{

Downer EDI{

Kellogg Company{

Eaton Corporation{

Kesko Corporation{

Fashion Industry Charter for
Climate Action (FICCA){

Keurig Dr Pepper{

Ferrari{

KPMG UK{

L’Oréal Brasil{

Los Angeles Department of
Water and Power{

FirmenichFlowers Foods Inc{{{{

CDP GLOBAL SUPPLY CHAIN REPORT 2021

8

CDP Supply Chain members (continued)
Standard members (continued){

Prysmian SpA{

Marfrig Global Foods S/A{

Raizen{Mastercard Incorporated{

Renault Group{

MetLife, Inc.

{

Metropolitan Transportation
Authority (MTA)

Restaurant Brands
International{

Michelin{

Micron Technology, Inc.

{

Magna International

Ministry of the Environment,
Government of JapanThe Yokohama Rubber Co.,
Ltd.

{

Thule Group Ab{

Toyota Motor Corporation{{{{

Trelleborg AB{

Royal London Mutual
Insurance Society Limited{

Trimble Inc.

{S Group{

U.S. General Services
Administration{

S.C. Johnson & Son, Inc.

{{

Unilever PLC

{{

{

SABIC

{

Vale SA{{{

Samsung Electronics

Varian Medical Systems Inc{

Santa Catarina{{

Sekisui Chemical Co., Ltd.

Vattenfall Group

{

{

{

Velux A/S{

Senior plc{

Naturgy Energy Group SA{{

Verizon Communications Inc.

{

Sigma

{

NEC Corporation{

Sky Ltd{

Virgin Management Limited{

Snam S.P.A

{

Visa

{

SSE

{

VMware, Inc.

{

Stadium{

Vodafone Group{

Volvo Car Group{

Moody’s Corporation
Movida Participacoes Sa
MRVNational Grid PLC{{{

NHS England and NHS
Improvement{

Nissan Motor Co., Ltd.

{{

Nokia Group{{

Stéarinerie Dubois{{

Nomura Research Institute,
Ltd.

{

Stellantis N.V.

{

Walmart de México yCentroamérica

{{NTT Data Corporation{

Suzano Papel & Celulose{

Western Digital Corp

OMV AG{

Swisscom{{{

WestRock Company

{{{

{

{

Symrise AG{

Syncreon{

Zimmer Biomet

TD Bank Group{{

Zurich Insurance Group{{One Jeanswear Group
PepsiCo, Inc.
Philip Morris International{{{

Pinsent Masons LLP{

Telefónica

Pirelli{

Telstra Corporation{

Prudential Financial, Inc.

{

The Allstate Corporation{

Xylem Inc.

{{

CDP GLOBAL SUPPLY CHAIN REPORT 2021

9

MEASUREMENT
What is measured can be managed
Measurement is the entry point forbuyers that engage with suppliers
to understand and quantify
their environmental impact. The
environmental information reported
through CDP is used by CDP
Supply Chain members and their
suppliers to track their value chain
performance year-over-year anddrive action.

A climate disclosure framework for small and medium-sized enterprises
SMEs offer enormous potential for change, providing 50% of the world’s
employment and representing 90% of all businesses. It is therefore crucial
that SMEs are equipped with the tools and resources needed to set goalsaligned with a 1.5°C future and disclose environmental performance. For
this reason, CDP recently launched the SME Climate Disclosure Framework
to empower small and medium-sized enterprises to make strategic andimpactful climate commitments, track and report progress against thosecommitments, and demonstrate climate leadership. The frameworkprovides key climate-related reporting indicators and metrics that SMEs
should be reporting on and encourages setting targets grounded in science.
Its modular design provides flexibility for SMEs and data requesters to tailor
the use of the framework to their disclosure needs.

In 2021, despite the continual
economic disruption of COVID-19,
CDP received a record number ofenvironmental disclosures. 11,457
individual suppliers responded to
CDP’s questionnaires, including 5,285
SMEs, resulting in an overall growth of+ 41% when compared to 2020 levels.

pressure for more environmental
transparency from their customers
and other stakeholders. Increased
awareness and accountability,
demonstrated through more granularThis increase in responses is linked
to companies facing growing

quantitative data and verification,
will lay the foundation for meaningfulchange. What is not measured
cannot be managed; data disclosure
enables action.

Growth in CDP Supply Chain disclosures 2008–2021
Year
2021

23,487

11,4572020

15,637

8,098

2019

13,111

6,957

2018

11,000

5,600

2017

9,970

4,800

2016

8,298

4,366

2015

7,879

4,005

2014

6,503

3,396

2013

5,659

2,868

2012

6,215

2,415

2011

4,234

1,864

2010 1,000
2009 710
2008 634
0

1,853
1,402
2,318

2,000

4,000

6,000

8,000

Total suppliers who disclosed through CDP
Total suppliers requested to disclose

10,00012,00014,00016,00018,00020,00022,00024,000CDP GLOBAL SUPPLY CHAIN REPORT 2021

10

Quantifying impact

71%
71%
reported Scope 1 emissions

55%
55%
reported Scope 2 emissions

Around 63% of suppliers also reportsourcing commodities fromcountries with high deforestation risk.

Measuring the direct impact: Looking
more closely at the data disclosed bysuppliers, we see a consistent trend in
the percentage of suppliers disclosing
quantitative environmental KPIs. In
2021, 71% of responding suppliers
reported Scope 1 emissions, and 55%
reported Scope 2 (location and/or
market based) emissions. Throughthe Water Security questionnaire,
62% of responding suppliers
provided water withdrawal data, 60%
water consumption and 57% water
discharge.

Not measuring the supply chain
impact: There is a pattern ofcompanies assessing their own
operations and not looking at wider
impacts. Despite downstream
emissions being 11.4 times more than
Scope 1 and 2 emissions combined,
only 20% of suppliers reported Scope 3
emissions from purchased goods andservices. The most frequently reported
water risks are flooding and increased
water scarcity/stress, yet only 13% ofsuppliers confirmed that they haveprocedures in place for identifying andassessing water-related risks that fully
cover their supply chains.

The number of suppliers reporting
production and/or consumption data in
the Forests questionnaire also increasedslightly in 2021, though there are still
stark disparities between the different
commodities. Among the suppliers
exposed to each commodity, thepercentage that disclosed production
and/or consumption data
in 2021 was 68% for palmoil, 51% for timber, 38% for soy
and 29% for cattle products.

Regarding deforestation,
78% of suppliers have a traceability
system in place for at least one
commodity and traceability to country
level ranks among the three mostfrequently selected options fortraceability (and the most frequent forsoy).

Proportion ofdisclosingsuppliers with atraceabilitysystem

73%

85%

Timber82%

Palm Oil

76%

Cattle Products

Soy

Proportion ofdisclosingsuppliers that canat least partially traceeachcommodity to the top three most frequently reported origins
Slaughterhouse

Mill

Mill

22%

50%

21%
Forest Management

9%

22%

27%

18%
Fattening farm

Plantation

27%

35%
Farm

CountryCountryCountryCountry

15%

10%State or equivalent

9%

CDP GLOBAL SUPPLY CHAIN REPORT 2021

The time lag to evaluating impact
It is important to note that, at first
request, suppliers may require a year
or more to create the mechanisms
required to collect data. When
comparing first-time responders
with suppliers reporting through CDP
for the third time, the percentage
of suppliers disclosing operational(Scope 1 and 2) emissions rises from62% (first year) to 71% (third year).
Data quality needs improving
Demonstrating increased confidence
in their data, there is a growing
number of suppliers opting todisclose their information publicly.
In 2021, 41% of responding suppliers
agreed to have their climate change
disclosure published on CDP’s
website. 59% of suppliers kept their
response private, which shows thatmany companies are still concernedwith the accuracy of their disclosurein the face of public scrutiny.
Looking more closely at the suppliers
that reported to CDP over three years,
the percentage of those disclosing
publicly rises consistently with time,from 32% to 48%, highlighting againthat disclosure improves and grows
confidence over time.
As is the case with financial reporting,data accuracy and verification must
be built into the process in order toensure the quality of the disclosed
information. Among the suppliers
responding on climate change, only
17% verify their operational emission
data through third-party verification.
Among the suppliers that disclose
on water security, 12% externallyverify the data reported through
CDP, and 31% of suppliers reportingon forests verified the disclosed
information.

11

1st
1st timetime disclosers
disclosers

2nd
2nd timetime disclosers
disclosers

3rd
3rd timetime disclosers
disclosers

71%

68%

62%

2019
2019

2020
2020

2021
2021

Suppliers reporting operational emissions*
1st
1st timetime disclosers
disclosers

2nd
2nd timetime disclosers
disclosers

3rd
3rd timetime disclosers
disclosers

48%

40%

32%

2019
2019

2020
2020

2021
2021

Publicly disclosing suppliers*
CDP analysis reveals that it
takes time to perform a truly
comprehensive and verified
environmental impact assessment.
Buyers are highly reliant on thisinformation to understand theirown supply chain impacts, as suchengagement on this data (andimproving it) is the first step forbuyers in tackling their supply chain
impacts.
Supply Chain members taking action
on measurement
85% of surveyed members in 2021
engage with their suppliers on

expanding the scope and the qualityof the data reported, 46% of whom
have been doing so for over three
years. Members engage with their
suppliers on a constant basis andwork with them to build capacity forenvironmental impact assessment
and reporting. While environmental
KPIs are being integrated into
supplier code of conducts andcriteria used for purchasing andsupplier evaluation processes,
members increasingly look at their
suppliers’ data as part of their own
environmental performance, forexample when setting science-basedtargets.
*among suppliers reporting through- CDP over three years

CDP GLOBAL SUPPLY CHAIN REPORT 2021

Driving sustainable manufacturing and operations
practices to minimize environmental impact
is part of our mission at Flex. As part of oursustainability goals, we are targeting that 100%of our preferred suppliers will set greenhouse gas
emissions reduction targets by 2030. We strive
to use our position, as a diversified manufacturer,
in the value chain for good by collaborating,educating and sharing our best practices andexperiences with suppliers so they can be part ofthis journey.
We’re excited to share that we have launched our
supplier sustainability greenhouse gas emissions
reduction program and are making good progress.
Through working with CDP Supply Chain, a
portion of our suppliers have disclosed theirenvironmental information, and we look forward
to growing this number. This is an integral step
toward mitigating emissions throughout the value
chain.
David Gessler, Vice President, Procurement &Supply Chain Management,
Flex

12

Arcos Dorados participated in the CDP Supply
Chain Program in 2021 for the fifth consecutive
year, achieving the highest response rates fromour suppliers in disclosing their environmental
impacts through CDP. In 2021, we achieved a
100% response rate from our requested suppliersin the climate change and forests, and 99% forwater security. We asked suppliers – representing
79% of our regional spend across food, packaging,logistics and equipment – to report through CDP.
Arcos Dorados is one of the largest buyers ofbeef in the region, and beef is one of the top threecontributors to the overall carbon footprint of our
supply chain (Scope 3 emissions). Since 2011,
we have supported and participated in global,
regional, and national roundtables, bringing
together partners to identify, develop and scale themost sustainable agricultural and cattle raising
practices. We request our beef suppliers reporttheir actions through CDP Supply Chain. The most
relevant have their own climate targets, and we areworking with them to develop tailored roadmaps tomeet our global GHG emissions target.
Partnering with CDP enables Arcos Dorados toimprove risk management. CDP offers Arcos
Dorados a more holistic approach for collecting
and analyzing the risk linked to the commodities
we procure.
Gabriel Serber, Director of Sustainable
Development and Social Impact,
Arcos Dorados

CDP GLOBAL SUPPLY CHAIN REPORT 2021

13

AMBITION
Are we aiming for the right level of action?
Once suppliers have successfully
established their impact throughaccurate measurement, they are
equipped to set ambitious, timeboundgoals to reduce this impact.
Currently, less than half of the
suppliers that reported environmental
data through CDP in 2021 have set
any internal climate goals. And only
34% of suppliers reported structured
climate targets with a goal period
and base year emissions. A similardisparity is seen among suppliers
who reported on their water impact.
While 72% of water disclosers set awater target, only 46% indicate thatthese targets are quantifiable andtimebound. Suppliers who report on
their forests impact show fluctuating
ambition levels depending on thespecific commodity to which theirdeforestation targets are linked.
As the climate crisis continues torapidly unfold all over the world, it
is evident that target setting must
happen at a larger and faster scalethan ever before. At the same time, it
is important to design these targets
in such a way that they are compliant
with the time-critical criteria set out in
the Paris Agreement.

Setting any target or goal takes time
CDP data demonstrates the time lag
between suppliers assessing theirenvironmental impact and setting
emissions reduction targets. CDP
recently analyzed suppliers who began
disclosing in 2019 and consistently
reported their climate impact over the
past three years. The total number of

those setting climate targets improved
by about five percentage points per
year. Taking into consideration that
more than half of the suppliers did nothave any climate targets in the 2021
reporting year, this finding implies that,at the current pace, at least anotherdecade would be required to ensurethat all reporting suppliers set any
climate target.

Suppliers setting climate targets 2019–2021
1st time disclosers

2nd time disclosers

30%

3rd time disclosers

34%

24%

2019

2020

2021

An annual +5 % of suppliers setting targets would be too slow to meet thestandards set out in the Paris Agreement. Supply Chain data shows thatpracticing environmental stewardship by cascading targets and progressive
policies down the value chain must be the next step.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

14

Getting the ambition level right
COP put nature at thetable with climate change
for the first time in 2021.
A new commitment toend deforestation wasannounced, with 133 world
leaders responsible foraround 90% of the world’s
forests promising to end
and reverse deforestation by
2030. A total of 33 financial
institutions, with $8.7 trillion
in assets under management,
committed to tackle
deforestation this decade.
450 firms, controllingaround 40% of global assets,announced that they wouldalign themselves with theParis Agreement 1.5°C,
potentially unlocking trillions
in private capital funds to thegreen transition.

Setting any target is a critical firststep. However, the science is clear;
we are too close to the deadline
for averting dangerous climatechange unless the right goals andtargets are set. Structured climate
targets, which currently make up athird of reported targets, only markthe beginning of the climate target
journey. The most ambitious targets
are based in science and align with a
1.5°C future.

Cascading 1.5°C ambition down the value chain
Buyers’ ambition
Over the last two disclosure cycles, the Supply Chain program has seen
tremendous growth in the number of its members adopting approved
science-based targets. Today, around 50% of CDP Supply Chain
members have science-based targets that are approved and validated
by the Science Based Targets initiative.
Suppliers’ ambition
While these Supply Chain members demonstrate best practice, thevast majority of their suppliers are still far from matching the members’
ambition levels. Only 2.5% of suppliers reported targets in 2021 that are
third-party approved science-based targets, aligning with emissions
reductions needed to stay below 1.5°C of global warming.
The countdown to 2030 is ticking fast, and with ever-growing global
emission levels, a very small window of time remains to bring allcompanies on track with what is needed to avert climate disaster. As
such, in September 2021, CDP Supply Chain members stepped up
to drive SBT target setting at scale. 26 CDP Supply Chain members,
spending $500 billion annually, joined investors representing $29.3
trillion in the CDP Science-Based Targets Campaign. This encourages
high-impact companies globally to set 1.5 °C-aligned science-basedtargets through the Science Based Target Initiative (SBTi).

CDP GLOBAL SUPPLY CHAIN REPORT 2021

Policies help to ramp up ambition
CDP water data also demonstrates
that policies can be effective
supplemental instruments to scale
up water-related target setting. The
number of suppliers that set water
related goals was 40% higher whena water-related policy was present
simultaneously. Suppliers with morecomprehensive policies also reported
more advanced and detailed water
goals. For example, the numberof suppliers with water efficiency
targets was three times higher amongsuppliers who also reported to have acomprehensive water policy in place.
Suppliers without comprehensive
policies performed worse onquestions pertaining to specificwater-related target setting.
However, currently 70% of suppliers
already have a broad water policy ora plan to integrate one soon. Thisis encouraging, as it will enable
these suppliers to build out morecomprehensive policy structuresin the future that hopefully also
drive ambitious target setting.
Comprehensive policies are importantbecause environmental goals andoutcomes work in tandem. Climate
action can only be amplified if we also
ramp up ambition on safeguarding
water resources and preventing
deforestation.

45%
of suppliers disclosing information
through the CDP forests
questionnaire report to have set a
cross-commodity forest-related
policy. However, at the specificcommodity level, there are still starkdisparities in ambitious target setting.

15

Companies that are further ahead in
their sustainability journey can leadby example and cascade ambition,
target setting and policies down thevalue chain. However, considering thedemonstrated time lag and the limited
time left to keep global warming frompassing critical tipping points, it is
crucial to get these suppliers started
on their journey now.

The CDP Supply Chain programamplifies members’ ambition andleverages their suppliers’ data todevelop a tiered approach for supplier
KPI and goal setting. This approach
eventually sets all companies ona path to achieve their Scope 3
emissions reduction goals, all whileaccounting for their different maturity
levels today.

Deforestation targets

Percentage of suppliers with aforest-related target

Cattle products

27%

Cocoa

42%

Coffee58%

Rubber28%

Palm Oil

66%

Soy

41%

Timber products

45%

CDP nature-positive challenge
At COP26, CDP launched the nature-positive challenge to drive
collaboration for deforestation-free, restorative supply chains. Thisinitiative connects companies to implement forest and land-use
projects. Collective action is needed if we want to halt and reverse
deforestation, which is imperative for limiting warming to below 1.5°C
and seeing a nature-positive world.
How does the challenge work?
Projects for inclusion in the challenge can be submitted from any
company disclosing through CDP on forests. For Supply Chain
members and their suppliers, CDP also plays an active matchmaker roleto streamline the process and identify relevant projects in line with thechallenge’s guiding principles, based on data already disclosed throughthe supply chain module of the forests questionnaire.
Visit the website to discover the exclusive benefits offered and sign up
to the challenge.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

16

Supply Chain members taking action on ambition

The Earth is finite and only has so much carrying
capacity for greenhouse gas emissions. It’s crucial
for companies to set science‑based targets that alignwith what’s needed to avoid the most devastating
impacts of climate change. Stanley Black & Decker
committed to a science-based target approved by the
SBTi in 2018, and we have set a goal for two-thirdsof our supply chain by spend to set Scope 1 and 2
science-based targets by 2025.
Steven Katzfey, Chief Procurement Officer,
Stanley Black & Decker

In January 2021, MRV committed to the SBTi
(Science-Based Targets initiative), becoming the first
construction company in Latin America to commit toreducing greenhouse gas (GHG) emissions by 2030.
Our focus is to mobilize our supply chain to adopt
targets to reduce their GHG emissions, driving thetransition towards a low carbon economy.
Eduardo Fischer, Chief Executive Officer,
MRV

NEC Group aims to achieve zero GHG emissions fromthe entire supply chain by 2050, and is working to
reduce GHG emissions based on a reduction plan thatcomplies with SBT 1.5°C. Since Scope 3, Category 1
accounts for more than half of GHG emissions in theentire supply chain, we initiated supplier engagement
through CDP Supply Chain membership in 2019. Basedon the response we received, we now hold individual
feedback meetings for suppliers with relatively
low evaluations. We also promote engagement by
sharing NEC's policy and cases with our suppliersand commending their excellent GHG emission
reduction measures. NEC will continue to enhance
supplier engagement to achieve our SBT of 1.5°C andcontribute to the realization of a decarbonized society.
NEC GroupCDP GLOBAL SUPPLY CHAIN REPORT 2021

17

ACTIONHow much progress havesuppliers made?
Almost 1.8 billion metric tons of
GHG emissions reductions last year,
saving over

US$29 bn

60%of the emissions targets with a target
year before 2021 were met

2/3
of suppliers failed to reduce their water
withdrawals from water-stressed areas

60%
of forest responders report to havea policy that includes forest-related
issues

It is now time to turn the momentum
discussed in previous sections
into tangible actions to reducecompanies’ environmental impact
across all tiers. Urgent andconsistent measures are needed;
this hinges on the collaboration of
all actors in the value chain.
When surveyed, almost 90% of
responding CDP Supply Chain
members said they are currently
engaging their suppliers on improving
environmental performance, with anadditional 9% planning to do so soon.
Suppliers are responding to thisengagement. They reported almost
1.8 billion metric tons of GHG
emission reductions last year, saving
over US$29 billion. This is great
progress and also shows that, inmost cases, climate action makes
business sense.
However, similar to targets, there
is a time lag between companies
assessing impact and the action thatis driven by doing so. The percentage
of suppliers that disclosed throughCDP over three years and also reportto have emissions reduction activities

in place has grown year over year:
45% in 2019, jumping to 49% in 2020
and reaching 51% in 2021.
The scale of action must be increased
as well. Currently, not all suppliers
have upheld their commitments.
The analysis on reported emissions
targets with a target year before 2021
shows that only approximately 60%
of absolute targets were met, andlower performance was registeredfor intensity targets, where only 55%
reported to have reached the desired
emissions reductions.
Similarly for water accounting,suppliers that measure and monitor
their activities reduce their impact.
Almost half of the suppliers disclosing
in 2021 reported reducing theirwater withdrawals, consumption anddischarges when compared with theprevious year. However, two thirds ofsuppliers failed to reduce their water
withdrawals from water-stressed areas.
Almost 60% of suppliers who discloseon their forest impact report to havea policy that includes forest-related
issues, and nearly 50% made a publicforest-related commitment.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

The fail of the cascade
One of the biggest takeaways fromthis report is that the necessary
cascade of action down the supply
chain is not happening. With the
majority of impacts lying in acompany’s supply chain, it is a
key indicator of the efficacy ofcompanies’ environmental strategies.
Our data has shown that it often

18

takes years from initial engagement
to setting appropriate targets andtaking necessary action. Therefore,
it was disheartening to see that only
38% of companies are engaging theirown suppliers on climate change,and even more concerningly, only
16% do so on water security.
To halt deforestation and practices
that damage ecosystems,

collaboration with all suppliers smallholders, direct and indirect
suppliers - is key. Across allcommodities, 62% of companies
reported engaging their direct
suppliers, while less than half (43%) of
downstream companies (processors,
traders, manufacturers, retailers) workwith smallholders and go beyond
their first-tier suppliers (47%; traders,manufacturers, retailers).

Companies that disclosed in 2021 and actively engage with suppliers on each theme:

38%

Climate change

47%
Forests**downstream companies (traders, manufacturers,
retailers) working beyond their first-tier suppliers tomanage and mitigate deforestation risks.

The comparison of engagement
percentages against last year’s
performance shows little to no
progress. This is no surprise as
the demand from customers tocascade engagement down their
suppliers’ own value chain is often
deprioritized. However, cascading
action through the value chain
is necessary to eventually meet
ambitious targets and must be
amplified by continued supplierengagement.

16%

Water security

CDP GLOBAL SUPPLY CHAIN REPORT 2021

19

Supply Chain members cascading action

CDP’s member survey showed that
85% of Supply Chain members
engage with their suppliers on
expanding the scope and the qualityof the data they reported.

46% of whom have been doing so forover three years.

67% of responding suppliers in 2021
reported that they set an emissions
target.

CDP Supply Chain membership allows us to gain better
insights into our Scope 3 emissions and highlights
opportunities to engage with our suppliers to reduce
emissions across the value chain. We invited our top
250 suppliers to participate, and more than 70% of those
suppliers disclosed their climate change data, including
dozens of suppliers who had never disclosed throughCDP previously. Through CDP Supply Chain membership,
we hope to accelerate supplier engagement on oursustainability journey, and gain a better understandingof risks and opportunities. We also want our suppliers
to commit to learn, improve and progress on their own
journeys, be willing to establish goals and KPIs based on
our sustainability priorities, and join us in collaborative
projects and initiatives to deliver on these goals. Together
with our suppliers, we want to build a strong foundationand scale the impact to achieve results.

We have been CDP Supply Chain members since 2017,
following a strategy of continuous improvement. In
addition to requesting the reporting of our suppliers’
actions regarding climate, forests and water-we will be
integrating the performance measured through CDP in
our supplier scorecards that will guide future actions anddecision-making. CDP’s forests and water questionnaires
support us in decision-making and in the designing ofstrategies for suppliers. Such strategies cover capacitybuilding and encourage initiatives across these themes.
Meanwhile, the data backs internal decisions, such as
MRV’s commitment through Conselho da Amazônia (theAmazon Council) to ensure the due origin of all acquired
timber and to eliminate all acquisition of hardwood.
The results have been improving year on year as CDP
supply chain membership grows and the quality andvolume of reporting increases.

AstraZeneca

Eduardo Fischer, Chief Executive Officer,
MRVCDP GLOBAL SUPPLY CHAIN REPORT 2021

20

TRANSFORMATION
28%
suppliers disclosed that they
have a low-carbon transition
plan in place

One feature required totransform environmental
concerns in supply chains isboard-level oversight. Around
82% of suppliers reporting
board-level oversight on Forests,
73% on Climate and 64% on
Water reported that their board
oversee issues related to therespective themes.

To truly avert catastrophic climatechange and ensure a deforestationfree, water-secure future, companies
need to undergo a transformation in
the way they work.
There is a clear need for increased
corporate ambition alongside effective
accountability mechanisms. Significant
pressure for greater transparency
around companies’ plans to transition
their business model to one that aligns
with a net-zero economy.
Through CDP's platform, only 28%
of suppliers in 2021 disclosed thatthey have a low-carbon transition
plan in place. This number is too
low, and one that is expected to drop

further with assessment of thesetransition plans against stakeholder
expectations. For example, dothey have science-based targets?
Are there sufficient accountability
mechanisms in place to ensure
delivery, and are they effectively
tracked in a manner that allows
stakeholders to assess progress?
Taking a deeper look at the data
provided by suppliers, we often
find that strategies do not match
stakeholder expectations. As
discussed in the Ambition section,
only 2.5% of these targets areapproved science-based targets thatare aligned with emissions reductions
needed to stay below 1.5°C.

The data of previous years
2020
2019

2020
2019

2020
2019

76%
Water
security

73%

72%
69% Climatechange60%62%

Forests

54%

of suppliers report board-level
oversight on climate change

The slow pace of transformation is noticeable. For 2020 and 2019, the figures for board
level oversight were respectively 62% and 60% for Water and 72% and 69% for Climate. The
percentage for Forests has a more significant increase, from 54% in 2019 to 76% in 2020.

82%

Only

report board-level oversighton forests

64%

report board-level oversight onwater security

700 / 11,418

suppliers

reporting on Climate
Change statedthat they have atransition plan as ascheduled resolution
item at their AGMs;

a share of6%of the overall
sampleand 21% of
suppliers
reporting atransition plan.

This data shows that the speed oftransformation in supply chainsis slower than needed. As is thetrend, the highest performanceis on climate change with 70%,
while positive reporting fails to reach
40% for water and 46% for forests.
This is further exacerbated whenit comes to financial planning; theaverage of supplier reports integratingclimate, water or forest-related
matters drops to 35% or less.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

Supply Chain members encouraging
transformation
Financial institutions andinvestors are increasingly focusedon how companies manage
their environmental risks andopportunities, including throughtheir supply chains, in order todefine interest rates, weighting in
portfolios and criteria for accessto credit and investment products.
Accordingly, companies that manage
to grasp and realize environmental
opportunities will harvest thebenefits of investment– in addition
to the market benefits. Movements
such as the Say on Climate Initiative,
which is supported by CDP, aim
to increase transparency throughdisclosure of credible transition
plans with additional accountability
mechanisms within those plans toensure credible delivery of climate
ambition. Investors, asset owners
and managers are in-line to benefit
from such initiatives, with increasedtransparency and accountability
driving responsible investment.

21

Purchasers are following suit:

Almost 90% of members surveyedreported that they are engaging or
willing to engage with suppliers on
governance and future strategies
to achieve environmental goals andtransitional plans.

Among them, 35% are planning tointegrate key performance indicators
into purchasing processes or suppliercode of conducts.

Unless companies pivot to a newparadigm where governance andstrategy are improved, they are goingto fail to realize opportunities. With
companies reporting $338 billion
associated opportunities related toclimate, the smart movers take action
now.

Moody’s strives to drive climate
action and social equity across our
supply chain. Through webinars
and other activities, we give ourvendors equal access to business
opportunities and provide resources
to help them set science-basedtargets and participate in climatechange disclosures. Our partnershipwith CDP’s Supply Chain programs
enable us to advance our responsible
sourcing efforts and move closer toour goal of reaching net-zero by 2040.
Sheila Gunderson,
MD-Procurement and Sourcing,
Moody’sCDP GLOBAL SUPPLY CHAIN REPORT 2021

To date the bulk of climate pledges have comefrom large corporates. However, the reality isthat delivering on ‘Scope 3’ emissions won’t
happen unless a lot more is done to help the
SMEs supplying their products. Since HSBC’s
Sustainable Supply Chain Finance (SSCF) program
launch in 2019, it has incentivised Walmart’s
suppliers through improved financing rates. Eligible
suppliers can approach HSBC for early payment on
their invoices approved by Walmart. Pricing on thefinancing is linked to the Supplier’s sustainability
rating, with the highest ambition suppliers
obtaining the lowest pricing. As more suppliers
reduce their own emissions and by setting
Science-Based Targets, both Walmart and HSBC’s
Scope 3 emissions are also reduced with all parties
benefitting from engagement and increasing
ambition on climate change.
Mr Surath SENGUPTA, Global Head,
Trade Portfolio Management,
HSBC

22

Ajinomoto Co., Inc. became a CDP Supply Chain
member to enhance supplier engagement.
The electronic materials is one of the corebusinesses of the Ajinomoto Group, in which we
focus on providing interlayer insulating materials
for semiconductor packages. As we enter anincreasingly data-driven society, we are seeing a
rapid increase in the demand for semiconductors
used in PCs, servers, 5G base stations, and similar,
and consequently societal demands for reduced
CO2 emissions by making these semiconductors
more energy efficient. By leveraging our longcultivated technical expertise and involving our
supply chain stakeholders, we have developed
new magnetic materials that enable power savingsin ever-faster semiconductors. The innovative
semiconductor package substrate attained
through this magnetic material will significantly
reduce electricity consumption and associatedCO2 emissions. The magnetic performance of
this material also enables reductions in the sizeof the semiconductor power supply functions,which helps with lower component counts,
thus achieving power savings, and contributesignificantly towards the maintenance of asustainable global environment.
Ajinomoto Co., IncCDP GLOBAL SUPPLY CHAIN REPORT 2021

23

SUPPORTING COMPANIES TOSCALE SUPPLY CHAIN ACTION
With only 38% of companies
reporting engaging with
suppliers on climate change,
55% on deforestation and 16%
on water security, the need toscale supply chain action isclear.

It can seem daunting to change procurement processes and train
companies on environmental issues. Not to mention engaging with a tierone of suppliers (which could number in the 1,000s) or even the full chain-hundreds of thousands of companies for some.
CDP is looking to help improve the speed and scale of supplier engagement
globally, leveraging over a decade of Sustainable Supply Chain experience. As
such, this year we are providing two tools to companies:

1
Sustainable Procurement Pathway
To answer the need of a simple
and scalable approach, CDP and
BCG designed the Sustainable
Procurement Pathway. This tool
aims to cover key aspects of asustainable procurement strategy
to achieve a consistent reduction ofenvironmental impacts across thevalue chain.
The Pathway analyses thedevelopment of a sustainableprocurement strategy in five different
phases, defined according to thematurity level of the company: fromthe Foundation phase to the Leadphase, which represent the end goal.
At the same time, the Pathway
addresses different fundamental
pillars of a comprehensive
sustainable procurement strategy:

Strategy

Communication

PeopleTechnology
backbone

Sustainable
Procurement Pathway

Supplier
engagement

Process(internal)

CDP GLOBAL SUPPLY CHAIN REPORT 2021

24

CDP's Sustainable Procurement Pathway, co-created with BCG

Foundation

Practice

Embed

Enhance

Lead

Agree overarching
Sustainability
objectives for
procurement.
Simple Sustainable
Procurement policy
in place endorsed byCEO. Communicate tostaff and key suppliers.

Review and enhance
the Sustainable
Procurement
strategy, in particular
recognising thepotential of newtechnologies. Try
to link strategy toenvironmental strategy
and include in overall
corporate strategy.

Augment the
Sustainable
Procurement policy
into a strategy
covering risk, processintegration, marketing,supplier engagement,
measurement anda review process.
Strategy endorsed byCEO.

Ensure Sustainable
Procurement policy
fits in with industry
best practices andcommunicate theprogressing natureof the policy with key
stakeholders.

Integrateenvironmental,
purchasing andbusiness strategy andmove the businesstowards a successful
1.5 aligned future.

Strategy

Illustrative KPIs you could leverage
Overall scope 3
upstream emissions
reduction: 0-10%

Overall scope 3
upstream emissions
reduction: 10-20%

Overall scope 3
upstream emissions
reduction: 20-30%

Overall scope 3
upstream emissions
reduction: 30-40%

Overall scope 3
upstream emissions
reduction: > 40%
1.5 compliancecertification

Adopt Sustainable
Procurement KPIs
into C-Suite. Give
key procurement
staff basic training
in Sustainable
Procurement
principles. Include
Sustainable
Procurement as partof a key employee
induction programme.

Give procurement
staff basic training
in sustainableprocurement
principles. Give
key staff advanced
training on sustainableprocurement
principles.

Organize targetedrefresher training onlatest Sustainable
Procurement
principles. Include
Sustainable
Procurement factors
in Performance
objectives andappraisal. Develop
a simple incentive
programme.

Include Sustainable
Procurement incompetencies andselection criteria.
Include Sustainable
Procurement as partof employee induction
programme.

Publish and celebrateachievements such as
internal and externalawards for buyers
achieving sustainable
results. Build KPIs
into all buyers
annual objectives.
Integrate Sustainable
Procurement KPIS into
all C-suite KPIS.

Illustrative KPIs you could leverage

People% procurement staff
trained to sustainableprocurement
principles: 30%% procurement staff
trained to sustainableprocurement
principles: 80%% procurement staff
trained to sustainableprocurement
principles: 100%% procurement staff
trained to sustainableprocurement
principles: 100%% procurement staff
trained to sustainableprocurement
principles: 100%% procurement staff
trained to advanced
sustainable principles:0%% procurement staff
trained to advanced
sustainable principles:30%% procurement staff
trained to advanced
sustainable principles:50%% procurement staff
trained to advanced
sustainable principles:100%% procurement staff
trained to advanced
sustainable principles:
100%

Procurement staff
incentivized onemission reduction:
25%

Procurement staff
incentivized onemission reduction:
50%

Procurement staff
incentivized onemission reduction:
100%

CDP GLOBAL SUPPLY CHAIN REPORT 2021

Supplier
Engagement

25

Foundation

Practice

Embed

Enhance

Lead

Undertake a Key
supplier spend
analysis (incl. degreeof buying power)
and identify highsustainability impact
suppliers. Target
key suppliers forengagement andsought views on
procurement policy.

Undertake detailed
supplier spend
analysis. Initiate
general programme of
supplier engagementwith senior manager
involvement.

Implement a targeted
supplier engagement
programme promoting
continual sustainability
improvement.
Establish a two-way
communication
between procurerand supplier withincentives. Map key
spend areas of supply
chains.

Target Key suppliers
for intensive
development.
Implement
Sustainability audits
and/or supply
chain improvement
programmes.
Achievements areformally recorded.
Ensure CEO in the
supplier engagement
programme.

Agree on Sustainability
Key Performance
Indicators withkey suppliers.
Reward progress or
penalize based on
performance relevantto the contract.
Ensure all C-suiteis involved in the
supplier engagement
programme.

Illustrative KPIs you could leverage
Suppliers engaged(spend): 0-10%

Start including
generalsustainability
criteria in key
contracts.

Suppliers engaged(spend): 10-40%

Systematicallyaward contracts
based on value-formoney (included
environmental
criteria), not lowest
price.

Process(internal)

Suppliers engaged(spend): 40-60%

Supplier engaged(spend): 60-80%

supplier engaged(spend): >80%

Suppliers engaged(emission): 50-60%

Suppliers engaged(emission): 60-80%

suppliers engaged(emission): >80%

Assess all contracts
for general
Sustainability
risks and identify
management
actions. Manage
all risks managed
throughout allstages of the
procurement
process (including
in Requests For
Proposals).

Build a long-termplan and adjust
related processes
to remove suppliers
that do not meet
the Sustainability
criteria or show noprogress towards
the criteria; Provide
higher rating for
proposals including
sustainability
criteria.

Ensure suppliers
recognized theymust continually
improve their
Sustainability profile
to keep the client’s
business.

Illustrative KPIs you could leverage
Sustainability
criteria included
in contracts
between to 0-10%
procurement spend.
EHS compliancein supplier code of
conduct: 100%.

Sustainability
criteria included
in contracts
between to 10-40%
procurement spend.

Sustainability
criteria included
in contracts
between to 40-60%
procurement spend.

Sustainability
criteria included incontracts 60-80%
procurement spend.

Sustainability
criteria included
in contracts > 80%
procurement spend.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

Technology
backbone

26

Foundation

Practice

Embed

Enhance

Lead

Review current scope1&211 data collection
and quality and define
new standards.

Finalize automationof scope 1&2 datacollection andcentralize in data hub.

Start automating
scope 1&2 datacollection and reduce
data silos.

Embed KPIs forthe data collection
process.

Agree on terminology
standards across key
suppliers.
Establish annual data
export according toagreed format.

Integrate
sustainability-related
information fromkey suppliers in data
hub and establish
automatic data upload.

Ensure automaticand reproduceable
data analysis on key
supplier data.

Develop simplified
dashboard to trackprogress on key
initiatives.

Ensure continuous
data integration across
SC for sustainabilityrelated data.
Develop Datavisualization /dashboarding tool to
track status quo andprogress of initiatives.
Build statisticalmodels to estimate
scope 3 emissions
where primary data is
not available.

Start reporting on
scope 3 data based on
generic estimations(procurement spend
x generic emission
factors).

Develop data models
describing the SC
and define suppliers'
profiles across the SC .
Get ad-hoc annual
analysis from key
suppliers.

Developscenario-based
simulations to support
abatement-driven
decision making.

Define data
governance processes
and checks.

Illustrative KPIs you could leverage
Data quality: 50% error
rate

Data quality: 35% error
rate

Data quality: 20% error
rate

Data quality: 10% error
rate

Data quality: 5% error
rate

Average time spenton carbon reporting(days): 60

Average time spenton carbon reporting(days): 30

Average time spenton carbon reporting(days): 20

Average time spenton carbon reporting(days): 10

Average time spenton carbon reporting(days): 5

Start reporting onhonest progress
via standardized
mechanisms such as
CDP.

Communicate
performance tosuppliers and key
stakeholders ensuretransparency inprogress.

Ensure frequent
communication to
suppliers and key
stakeholders.

Compare with peerorganizations.
Produce benefit
statements.

Publish independent
audit reports available.

Communication
Illustrative KPIs you could leverage
Results release: annual

Results release:bi-annual

Results release:quarterly

Results release:quarterly

Results release:quarterly
Audit report release

CDP GLOBAL SUPPLY CHAIN REPORT 2021

27

Foundation

Practice

Embed

Enhance

Lead

Key Sustainability
impacts ofprocurement activity
have been identified.

Detailed appraisalof the Sustainability
impacts of the
procurement
activity has been
undertaken. Measures
implemented to
manage the identified
high risk impact
areas.Reviewed andenhanced sustainableprocurement policy
including supplierengagement.
Policy is part of awider Sustainable
Development strategy.

Sustainability
measures refined fromgeneral departmental
measures to include
individual procurers
and are linked
to development
objectives.

Measures areintegrated into abalanced score card
approach reflecting
both input and output.
Regular meetings
with procurement andsustainability teams
to assess progress totarget.

Measures used todrive organizationalsustainable
development strategy
direction. Progressformally benchmarked
with peerorganizations. Benefits
from Sustainable
Procurement areclearly evidenced.

Results

Illustrative KPIs you could leverage
Tracking of scope 3
emissions: Annual

Tracking of scope 3
emissions: bi-annual

Tracking of scope 3
emissions: quarterly

Tracking of scope 3
emissions: monthly

Tracking of scope 3
emissions: monthly

Achieved ambition:
50%

Achieved ambition:
75%

Ambition achievement:
90%

Ambition achievement:
100%

Ambition achievement:
100%

Completeness of
mitigation plan: 70%

Completeness of
mitigation plan: 80%

Completeness of
mitigation plan: 100%2
Supplier Engagement Rating
Alongside this tool, any company
who reported to CDP’s full climate
questionnaire will receive a Supplier
Engagement rating (SER). This
analyzes data from all companies
that disclose through CDP on
climate change, relating to supplierengagement, governance, scope 3
emissions accounting, targets, andoverall CDP climate change score.
Those who obtain the highest SER
score join the Supplier Engagement

Leaderboard. Inclusion on thislist demonstrates that a company
is proactively working with their
suppliers to ensure that climatechange action is cascading down
their supply chain.
Companies can access the public
SER methodology here.
Companies can access the public
Supplier Engagement Leaderboard
here.

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28

THE FUTURE OF SUPPLY CHAIN ACTION
Enabling the decarbonization journey
Written by Sonya Bhonsle (Global Head of Value Chains at CDP) & Frank Cordes (Managing
Director and Senior Partner at Boston Consulting Group (BCG))
We know that supplier engagement drives essential environmental action:
Suppliers reported that engagement from over 200 Supply Chain members drove 231 million tons of emissions
reduction initiatives last year. However, those Supply Chain members are in the minority of global purchasers. With
only 38% of companies reporting engaging with suppliers on climate change, 47% of downstream companies (traders,manufacturers, retailers) working beyond their first-tier suppliers to manage and mitigate deforestation risks, and just
16% of companies engaging with their suppliers on water security, the need to scale supply chain action is clear.
It can seem like a monumental task to change procurement processes, train buyers on environmental issues andengage with your supply chain, which for some companies, can number in the thousands of suppliers.
CDP and Boston Consulting Group (BCG) want to accelerate the speed and scale of supplier engagement globally byoffering real solutions to tangible challenges, leveraging CDP’s 10+ years of sustainable supply chain experience and BCG’scross-industry expertise and dynamic tech capacity. As such, CDP and BCG provide innovative tools for organizations toassess and improve their supply chain engagement, increase transparency and reduce supply chain emissions.
1. The Sustainable Procurement Pathway
This framework, co-developed by CDP and BCG, is a comprehensive guide for organizations to assess and improve thematurity of their supply chain footprint management. It is a starting point to be leveraged and tailored by each organization
to its specific activities (e.g., KPIs and target definition). It is enriched by CDP questionnaire respondent feedback, with theambition to share best practice.
The framework analyses the development of a sustainable procurement strategy in five different phases, defined according
to the maturity level of the company: from the Foundation phase, until the Lead phase, which represents the end goal.
At the same time, the Sustainable Procurement Pathway addresses different fundamental pillars of a comprehensive
sustainable procurement strategy:{ Strategy{ People{ Supplier engagement{ Process (internal){ Technology backbone{ Communication
2. Supplier Engagement Rating
Alongside this tool, any company that reported to CDP’s full climate questionnaire will receive a Supplier Engagement
Rating (SER). This rating includes data from all companies that disclosed to CDP’s full climate change questionnaire.
The rating methodology includes aspects of supplier engagement, climate governance, scope 3 emissions accounting,targets and CDP climate change scores.
Those who obtain the highest SER scores join the Supplier Engagement Leaderboard. Inclusion on this list
demonstrates that a company is proactively working with their suppliers to ensure that climate change action iscascading down their supply chain.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

29

3. Product-level emissions data in the supply chain
Across regions and industries,
an increasing number of CEOs
see the fight against climatechange as one of their top
priorities. To truly advanceon their environmental
journey, it is crucial forcompanies to collaborate
as supply chain emissions
are 11.4 times higher thanoperational emissions. We
see ecosystems acting now
and our role as BCG is to
unlock the full potential of
their collaborative efforts totackle emissions and otherenvironmental footprints.
Rich Lesser,
Global Chair,
Boston Consulting GroupTo translate supplier engagement into true supply chain action, moretransparent, granular and precise product-level sustainability data is needed. It
will enable organizations to take targeted and high-impact action.
Fortunately, pressure for better product level emissions data is intensifying
from regulators and buyers alike. When surveyed, 66% of responding CDP
Supply Chain members said that lifecycle analysis is one of the key future
trends for driving sustainable supply chains.
However, suppliers are rarely able to provide the desired product-levelsustainability data e.g., only 2% (247) of suppliers reported any product-level
life cycle footprints to CDP in 2021.
In order to tackle the issue, consistent standards and methodologies must be
in place, as well as the technical solution for not only seamless and secure dataexchange–but also advanced analytics supported sustainability computations.
We Mean Business partner WBCSD has been working with the GHG Protocol(and others) to develop a new product carbon footprint methodology.
Launched at COP26, ‘the Value Chain Carbon Transparency Pathfinder’ is a
new cross-value chain initiative to define standards and methodologies toaccelerate credible, verified primary product-level emission data sharing.
In line with the standard setting and methodology efforts, BCG and CDP
are pleased to announce their strategic partnership to build CO2 AI ProductEcosystem, a free platform that enables companies to collaborate on—andaccelerate—their emissions optimization journeys by sharing product-levelsustainability data in a secure, auditable, and action-oriented manner. The
platform’s key benefits include bringing transparency to scale, and moregranular and accurate measurement of scope 3 emissions — external emissions
that occur in the value chain of the reporting company, including upstream
and downstream emissions. As such, it helps to identify and assess hot spots
across the customers’ supply chains, serving as the tech backbone of actionoriented decision making and decarbonization.
With this CO2 AI Product Ecosystem, companies will be enabled to set bettertargets and use simulations to identify the most impactful opportunities toreduce emissions and optimize operations at the product level. They will have thecapability to manage complex, large-scale programs and concurrent initiatives at
a granular level.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

30

Conclusion
New technology can be atremendous enabler for theworld’s decarbonization
journey. CO2 AI by BCG,
a patented, end-to-end
AI-powered solution, hasdemonstrated improvements
in sustainability baseline
granularity and precisionby 30-50% in companies
across industries such as
pharmaceuticals, consumer
products, steel and many
more. A reliable baseline is
key for reporting purposes but
more importantly, it also allows
companies to define ambitious
sustainability targets
confidently and employees
to steer sustainability efforts
effectively thereby, enablinga footprint reduction of up
to 30-40%, demonstrated
across industries. Now,
we are excited to present
a unique tech platform forecosystems to exchangesustainability product-level
data and accelerate theirdecarbonization journey incollaboration with CDP.
Charlotte Degot,
Managing Director andPartner,
Boston Consulting Group andCEO, CO2 AI by BCG

Environmental action is needed at speed and scale to develop sustainablesupply chains and deliver on worldwide ambitions such as the Paris
Agreement. This is only possible through collaboration, both internally, to bringsustainability to the top of the agenda, and externally, throughout the supply
chain. Solutions available today are effective, affordable, and needed to ensurebusiness continuity. Although technology will not solve the climate crisis itself,
AI-enabled technology can contribute significantly. This is why CDP and BCG
will launch a new product lifecycle platform that will enable companies toeffectively collaborate and securely share their product-level sustainability data
- to drive transparency at scale.

CDP GLOBAL SUPPLY CHAIN REPORT 2021

31

ACKNOWLEDGEMENTS
CDP would like to thank the members and responding companies consulted
during the preparation of this report. Firstly BCG who supported in the
production of this report and the creation of the Sustainable Procurement
Pathway. We would also like to thank Nicolas Hieronimus, CEO of L’Oréal,
for his foreword. We are grateful to receive funding for CDP’s Power ofProcurement project from Norway’s International Climate and Forest
Initiative. Our appreciation goes to our Japanese scoring partners and our
global scoring partner, Bureaus Veritas, for its help and support. Thanks
also go to the contributions from the CDP Supply Chain, Climate, Forests,
Water Security and Communications teams, with special mention to Laura
Hohmann, Francesca Testa, Alice Borgonovo, Gustavo Machado de Melo,
Muhammad Panji Putra, Scott Twigg, Sapna Shah, Sundara Bhandaram, Viera
Ukropcova, Laureen Missaire, Tom Coleman.
Sonya Bhonsle
Global Head of Value Chains, CDP

CDP Supply Chain premium and lead members:

We are grateful to receive funding
for CDP’s Power of Procurement
project from:CDP Contact

NORTH AMERICAPaul Dickinson
Executive Chairman

Andrew Cummings
Laura Hohmann
Michele Riotta
Gerald Welch
Richard Oliveras
Jeremy Edelman
Sarah Bloch
Justine Giordano
Dana Alia

Paul Simpson
Chief Executive Officer
Dexter Galvin
Global Director, Corporations &Supply Chains
Sonya Bhonsle
Global Head of Value Chains
George Hodge
Global Head of Sales & Business
Development

UK & GLOBALJames Chamberlayne
Vena Gadher
Imogen Terry
Orion Joski-Jethi
Jianghong Lucky
Jennelle Anderson
Phoebe Bridges

EUROPE
Hugo Ernest-Jones
Panji Putra
Francesca Testa
Helen Bai
Izabela Bajalska
Paola Tatay
Aoife Devaney

CDP Worldwide
Level 460 Great Tower Street
London EC3R 5AZ
Tel: +44 (0) 20 3818 3900

LATIN AMERICA
Lais Maciel
Fernanda Coletti
Celine Tapia
Gustavo Machado de MeloÍtalo Veras Eduardo
Luz Dondero
Maria Luisa Pertuz
Sophia Coelho

JAPAN
Emi Matsukawa
Kae Takase
Ken Yamaguchi
Wataru Kawamura

CHINA
Wanyu Sung
Sifan Jiang
Xuan Gui
Yimin Zhou

www.cdp.net
info@cdp.net
Twitter: @CDP
LinkedIn: /cdp-worldwide© CDP 2022
This report and all of the public
responses from corporations
are available for download fromwww.cdp.net

HONG KONG &SOUTHEAST ASIA
Elim Kwok
Fredrik Andersen
Bruno Leung

INDIA
Divya Varma

With support from Boston
Consulting Group:
Michel Frédeau
Managing Director and Senior Partner
Frank Cordes
Managing Director and Senior Partner
Charlotte Degot
Managing Director and Partner
François Bastard
Project Leader
Morten Lybæk
Consultant
Aicha Mezzour
Senior Associate