Recent research from The Carbon Trust reveals a potentially unsettling truth for the B2B
market: multinationals are not just addressing their own greenhouse gas
emissions. They are also increasingly
including carbon in their selection criteria for suppliers. Within three years, the vast majority will do
so – only 10% say otherwise.
Why this move – is it part of these multinationals’ attempts
to look green? The report ascribes the
trend to “shareholder pressure”. Are
these shareholders investing in an increasingly ethical way, or are they
looking for financial value? I would
suggest the latter - in other words, this isn't a fad. It's part of a trend towards shareholders actively looking after the value of their investments. Suppliers should take note.
It is not only shareholders who know that low carbon can translate into good value. Sourcing professionals look for signs of quality and
efficiency to ensure that they are getting the best goods at the best
price. Low carbon emissions signal
efficiency – that a supplier is using less inputs for the same output. That will translate into a sustainably lower
cost structure, from which the buyer hopes to benefit. Multinationals are sourcing low carbon
because it’s often cheaper, and is likely to get even more competitive if
fossil fuel costs rise further.
Shareholders and management want to know that their companies are managing
for value.
A quote from Chris Harrop of Marshalls plc is particularly
revealing: “By choosing suppliers of responsibly sourced goods not only do we
cut carbon emissions but invariably there are cost and efficiency gains to be
had, which all adds up to a strong competitive advantage.” Perhaps it’s nice to be green, but it’s good
business to be cost competitive, and paying attention to carbon in the value
chain helps firms solidify this advantage.
So, suppliers now have another reason to address emissions,
if cost competitiveness itself were not enough.
Multinationals will be expecting suppliers to report on, and compete on,
greenhouse gas emissions. Their
suppliers will be asking the same questions right down the supply chain. If your business customers are not already
asking you to reveal to your carbon footprint, they soon will.
