Bloomberg News

Companies May Oust Suppliers Over Environment Goals, Group Says

February 01, 2012

Feb. 1 (Bloomberg) -- Companies looking to save money by going green may be willing to fire suppliers who don’t act quickly to help, a nonprofit group called the Carbon Disclosure Project reported after surveying Coca-Cola Co. and others.

The number of multinationals planning to dump vendors within five years for missing environmental targets more than doubled to 39 percent in 2011, according to a report today. The study, released in London by Accenture Plc and the nonprofit, involved 50 respondents, also including Kraft Foods Inc. and Wal-Mart Stores Inc. The report didn’t name any of the companies planning to dismiss suppliers.

Companies such as Wal-Mart require vendors to reduce everything from water usage to carbon emissions as a means of cutting operational expenses and the cost of goods. Investors are paying attention, ranking companies on how well they enforce reductions and lock in savings. There isn’t much effect on multinationals’ suppliers yet, according to the report’s backers.

“We are yet to see a transformational impact on suppliers’ emissions,” Frances Way, program director for the Carbon Disclosure Project, said today in a statement.

Two-thirds of the companies surveyed train procurement staffs on supply-chain carbon management, up from a quarter of respondents in 2009, according to the report.

Last year, companies whose climate-change strategies incorporated procurement guidelines rose to 90 percent, from 79 percent in 2010, according to the report.

Three times as many companies in 2011 -- 62 percent -- gave incentives such as preferential treatment to suppliers on the basis of carbon management, the survey found.

--Editors: Jeffrey Tannenbaum, John Lear

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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