Introduction
Climate change is a problem that impacts every profit and non-profit organization across the world. Supply chain activities are primary contributors to the carbon footprint, thus require attention. Over seventy-five percent of the greenhouse gases in organizations originate from supply chain activities (Lee 1218). Releasing such toxic gases into the environment has severe consequences such as global warming that threaten both plants’ and animals’ quality of life. This paper discusses the importance of carbon disclosure in the supply chain and product lifecycle.
Firms are increasingly involving their suppliers in the management strategies of greenhouse gas (GHG) emissions. Automobile corporations, such as Hyundai Motor Company, integrate carbon footprint in their supply chain management initiatives (Lee 1216). Other companies, such as Dell, UBM, Intel, Johnson & Johnson, and Kimberly-Clark, are reaching out to their suppliers over the management of GHG emissions (Meinrenken et al. 2). Despite the existing mandatory policies, many corporate entities have freely disclosed information about their carbon emissions in response to global warming concerns.
The Role of Carbon Disclosure in Supply Chain and Product Life Cycle
Carbon disclosures play an essential role in mitigating the risk of carbon emission procurement and distribution processes. The Carbon Disclosure Project (CDP) is a significant step taken to heighten international environmental protection and conservation efforts. Carbon disclosure involves tracking and reporting corporate carbon profiles to allow relevant agencies to assess risks (Pattberg 1441). The project generates rich and comprehensive data that enhance transparency and accountability in writing. The CDP data help organizations strategically position themselves concerning carbon risks. Accurate disclosures assist organizations during decision-making in capital allocation.
The carbon disclosure project has initiated the involvement of suppliers in promoting the sustainability goals of companies. Organizations currently involve the suppliers as a strategy to achieve greater levels of GHG emissions. Based on the case of Hyundai Motors, businesses pursue their reporting objectives by identifying and measuring both direct and indirect carbon footprints to enhance mitigation efforts in their supply chains (Lee 1217). Similarly, Alcatel has GHG goals that include a reduction in its supply chain. Controlling supply chain GHG emissions can also prohibit the harm to the brand name and ensure efficient preparedness in meeting the established carbon protocols. The strength of a brand name is influenced by the status of sustainability.
Furthermore, the process of carbon disclosure can help in sensitization of the market on global environmental issues such as climate change (Depoers et al. 446). The CDP helps in assessing potential risks across product lifecycles and supply chains. It helps companies to gather carbon profile data and report it to relevant stakeholders to inform climate-related stakeholder decisions. The report assists firms in analyzing their direct and indirect carbon footprints and internal energy regulations. The information also helps in identifying gaps within existing reporting frameworks and evidence-based strategies for improving environmental protection. Disclosure enhances standardization of replies by leading organizations to the GHG protocol for estimating and reporting emissions. In addition, reporting to CDP can help a company gain a competitive advantage (Axjonow et al. 432). The process assists an organization in getting ahead of the regulatory and policy alterations while also detecting and combating increasing risks and determine new opportunities for procedures that stakeholders and consumers in the global market.
Moreover, there is a high and continuously increasing market demand for environmental disclosure. For instance, investors with over USD 110 trillion assets and large buyers with above USD 4 trillion in procurement demand disclosure of environmental data through CDP (Depoers et al. 446). Disclosure improves an organization’s reputation since it develops trust through transparency and response to the increasing awareness of environmental aspects among the community (Axjonow et al. 430). The process also improves the competitive advantage over other rivals in the market to enhance access to capital and win tender awards. Additionally, the action can also help a company discover risks and opportunities that would be neglected and, hence, initiate strategies based on data. Tracking and benchmarking success concerning environmental activities about other organizations can help get feedback about the process.
Implementation of CDP Metrics and Green House Gas Emission Reduction
There is no direct relationship between disclosure and decision-making from a stakeholder, non-profit organizations, or policy advisor. The decision-making process relies on several assumptions about the significance of disclosure, the type of it, and the users’ awareness. Companies can decide to respond or turn down as they wish. The organizations can also give all or part of the requested data. Therefore, the CDP has been helpful in numerous instances, but the information is relatively sparse.
On the other hand, most top managers of supply chain companies are aware of the danger of climate change’s effects on the environment. Therefore, the leading executives support the efforts to manage GHG emissions within the company operations and across the supply chain. These organizations have developed allies in business sectors for incorporating suppliers in managing their emissions (Mitchell). Organizations such as Hyundai Motor Company have engaged one business unit to control the carbon emissions for its suppliers (Lee 1217). Such innovative initiatives are designed to reduce GHG emotions and reporting in the supply chain.
The levels of carbon reduction achievements have changed drastically since the establishment of the CDP. Studies indicate that the carbon emission intensity CI across products is several times greater than the products’ weight (Meinrenken et al. p1-12). The implementation of CDP enhances an understanding of a product’s life cycle which promotes the forecasting of products related to carbon radiation while also resulting in greater reported decline realization.
Conclusion
Carbon disclosures play significant roles for various organizations. Reporting to CDP can help a company to gain a competitive advantage in the market. There is a high and continuously increasing market demand for environmental disclosure. Considering that supply chain activities are a major source of GHG, companies are striving to improve their commitment to sustainability and satisfying emission protocols by engaging in regulating emissions throughout the supply chain. This trend provides strong evidence for organizations to frequently evaluate their carbon footprint in the supply chain and report their profile to enhance environmental protection.
Works Cited
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Depoers et al. “Voluntary Disclosure of Greenhouse Gas Emissions: Contrasting the Carbon Disclosure Project and Corporate Reports.” Journal of Business Ethics, vol. 134, no. 3, 2016, pp. 445-461.
Lee, Ki-Hoon. “Integrating Carbon Footprint into Supply Chain Management: The Case of Hyundai Motor Company (HMC) in the Automobile Industry.” Journal of Cleaner Production 19.11 (2011): 1216-1223.
Meinrenken, Christoph J., et al. “Carbon Emissions Embodied in Product Value Chains and the Role of Life Cycle Assessment in Curbing Them.” Scientific Reports, vol. 10, no. 1, 2020, doi:10.1038/s41598-020-62030-x.
Mitchell, Cullen. Walking the Talk: Corporate Greenhouse Gas Emissions Reduction and Green Brand Identity. Diss. Tufts University, 2020.
Pattberg, Philipp. “The Emergence of Carbon Disclosure: Exploring the Role of Governance Entrepreneurs.” Environment and Planning C: Politics and Space, vol. 35, no. 8. (2017), pp. 1437-1455.