Major firms push green down their supply chains

Major firms push green down their supply chains

( dpa ) - Eleven major international corporations Sunday said they would start monitoring carbon emissions of smaller companies that supply them, in the latest private business initiative to tackle global warming.

The firms include Dell Computers, Hewlett Packard, L'OReal, Reckitt Benckiser, PepsiCo, Cadbury Schweppes, Imperial Tobacco, Nestle, Procter & Gamble, Tesco and Unilever, who have joined a programme called the "supply-chain leadership collaboration".

The initiative - which follows a path begun in September by the world's largest retailer, Wal-Mart - was announced by the Carbon Disclosure Project (CDP), a British-based global organization of 315 private investors including Goldman Sachs and Merrill Lynch.

Their combined investment muscle is 41 trillion dollars, or one- third of the world's invested assets, and represents the world's most intense effort to measure climate change as a business risk.

Since its inception five years ago, the CDP has sent questionnaires to 2,400 of the world's largest companies to see how they are reducing emissions and capitalizing on competitive opportunities arising from climate change. It publishes an annual rating report based on the responses.

Now, CDP says, it's time for those major companies to start pushing green policies down their supply chains to tens of thousands of suppliers.

Dell, for example, got involved in CDP because of pressure from both customers and investors worried about global warming, which is blamed on carbon emissions.

"It was a call for responsibility," said Mark Newton, Dell's senior manager responsible for environmental policy, in an interview with Deutsche Presse-Agentur dpa.

In the new year, Dell and the other companies are sending out questionnaires to 50 of their suppliers in a pilot project to test the format and measure the response. After the trial, the firms intend to send questionnaires to thousands of suppliers.

Newton said the questionnaire aimed to simplify the discussions Dell will have with its suppliers.

"I wouldn't call it a Dummies guide, but its along those lines, simplifying a very complicated topic," Newton said, comparing the questionnaire to the popular Dummies guide books that put everything from computers to plumbing into plain language.

Newton said that most of the 50 suppliers chosen for the test run were Dell's biggest suppliers in China and elsewhere in Asia, who make everything from processors to hard drives.

The 80-per-cent response rate far exceeded his expectations.

"We are really pleasantly surprised as to the level of sophistication and willingness to move forward on this, and the realization that this is an important issue," Newton said. "We're encouraged (that) they are just as maniacally focussed on efficiency and cost improvements as we are."

Suppliers answer the questionnaires on a special internet portal operated by CDP.

The Dell manager said that the groundswell of concern over the last year about climate change has moved the issue from a low-profile investment "niche" into mainstream investment strategy. A key factor was decisions by Goldman Sachs and Merrill Lynch to consider climate change an investment risk.

That change has filtered down to the design department at Dell.

"Probably two years ago, we were not making this a design criteria," Newton said, speaking from Dell's Texas offices. "Energy efficiency probably came along with the design, if you did your design right. But now, energy efficiency is an intentional design criteria."

The driving force in corporate change is profitability, managers said. Last year, a smaller group of investors flexed 4 trillion dollars of investment muscle in Washington to demand that a reluctant White House and US Congress adopt national emissions standards so that companies can proceed with research and development of new products.

"We really think this is a competitive advantage to be taken seriously," Newton said of Dell's emissions strategy. "There's a sweet spot. There is a return on investment calculation that has to be done."

Voluntary leadership by private companies represents a "very interesting groundswell," said Paul Simpson, chief operating officer of the Carbon Disclosure Project.

He believes it's crucial to laying the groundwork for eventual government regulations.

"Companies like Dell are leading the way," Simpson said.

He believes that US inertia will disappear once US President George W Bush leaves office in January 2009.

"We will see a change when we have a new president," Simpson said. "It doesn't matter whether it's a Democrat or Republican."

Dell's Newton said he believes the ideas of corporate and supplier accountability eventually will filter down to the individual, personal level - the best "exit strategy" from the dangers of global warming, he said.

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