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Carbon Dated: Multinational Companies Planning to Cut Suppliers by 2025 for Failing to Curb Carbon Emissions

June 7, 2021 GMT

NEW YORK--(BUSINESS WIRE)--Jun 7, 2021--

A new study by Standard Chartered reveals that 78 per cent of multinationals (MNCs) will remove suppliers that endanger their carbon transition plan by 2025.

According to Carbon Dated, which looks at the risks and opportunities for suppliers in emerging and fast-growing markets as large corporates transition to net zero, MNCs expect to exclude 35 per cent of their current suppliers as they transition away from carbon.

The study also found that:

  • Supply chain emissions account for an average of 73 per cent of MNCs’ total emissions
  • More than two thirds (67 per cent) of MNCs say tackling supply chains emissions is the first step in their net-zero transition, rather than focusing on their own carbon output
  • Suppliers in 12 key emerging and fast-growing markets can share in USD1.6tn worth of business if they can remain part of MNC supply chains

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The net-zero supply chain revolution

Racing against the clock to hit their net-zero carbon goals, MNCs are increasing the pressure on their suppliers to become more sustainable, with companies based in emerging and fast-moving markets facing the biggest challenge.

Some 64 per cent of MNCs believe emerging market suppliers will struggle more than developed market suppliers to meet their emission reduction targets, with a further 57 per cent prepared to replace emerging market suppliers with developed market suppliers to aid their transition.

MNCs are concerned that emerging market suppliers are failing to keep pace for two key reasons; insufficient knowledge and inadequate data. Some 56 per cent of MNCs believe that the lack of knowledge among emerging market suppliers (41 per cent for developed market suppliers) is a barrier to decarbonisation.

With MNCs struggling with the quality of data, two-thirds are using secondary sources of data to plug the gap left by supplier emissions surveys. A further 46 per cent say that unreliable data from suppliers is a barrier to reducing emissions.

Risks and rewards

The study also reveals that the current approach taken by MNCs could create a USD1.6tn opportunity for the net-zero club: those businesses reducing emissions in line with MNC net-zero plans.

This represents a major opportunity for net-zero-focused suppliers across the 12 markets in this study, but also quantifies the potential losses to companies not embracing net-zero transition.

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Market

Annual export revenue at risk

China

USD512.3bn

India

USD273.7bn

Hong Kong

USD205.5bn

Singapore

USD146.6bn

South Korea

USD142.5bn

The UAE

USD119.6bn

Malaysia

USD65.3bn

Nigeria

USD34.3bn

South Africa

USD33.7bn

Indonesia

USD25.6bn

Bangladesh

USD18.7bn

Kenya

USD3.9bn

MNCs are also willing to spend more on net-zero products and services. Some 45 per cent said they would pay a premium, of 7 per cent on average, for a product or service from a net-zero supplier.

Carbon, collaboration and compromise

MNCs are exploring other ways to help their suppliers’ transition to net zero. Some 47 per cent are offering preferred supplier status – a sales advantage – to sustainable suppliers, and 30 per cent are offering preferential pricing.

Some MNCs are going further, offering grants or loans to their suppliers to invest in reducing emissions (18 per cent) or data collection (13 per cent).

How are MNCs supporting their suppliers to reach net-zero?

Percentage

Offering preferred supplier status to sustainable suppliers

47 per cent

Investing in new technologies on behalf of their suppliers

46 per cent

Helping educate them on effective energy efficiency strategies

37 per cent

Helping educate them on reducing waste from their operations

36 per cent

Providing access to industry specialists who will help suppliers reduce emissions

35 per cent

Investing in clean energy infrastructure in key suppliers' local markets

31 per cent

Preferential pricing for measurably sustainable suppliers

30 per cent

Grants or loans to invest in reducing emissions from operations

18 per cent

Grants or loans to invest in data collection

13 per cent

Jeremy Amias, Vice-Chairman at Standard Chartered Americas, says: “Reducing supply chain emissions will materially support many North American companies’ progress towards their net-zero ambitions. Through collaboration and partnerships, corporations have a unique opportunity to require sustainable supply chains and set in motion commerce that enables the economy and the planet to prosper together.”

Carbon Dated surveyed 400 sustainability and supply chain experts at MNCs across the globe.

www.sc.com/carbon-dated

Standard Chartered

We are a leading international banking group, with a presence in 59 of the world’s most dynamic markets and serving clients in a further 85. Our purpose is to drive commerce and prosperity through our unique diversity, and our heritage and values are expressed in our brand promise, here for good.

Our history in the US dates back to 1902, and we are currently present in eight locations throughout the Americas. Our Americas franchise focuses on financial institutions and select corporates and plays a key role in facilitating trade and investment flows between the Americas and Asia, Africa, and the Middle East.

Standard Chartered PLC is listed on the London and Hong Kong Stock Exchanges.

For more stories and expert opinions please visit Insights at sc.com. Follow Standard Chartered on Twitter, LinkedIn and Facebook.

View source version on businesswire.com:https://www.businesswire.com/news/home/20210607005598/en/

CONTACT: Chris Teo

Head of Corporate & Business Communications, Americas

Standard Chartered Bank

Tel: +1 212 667 0446

Email:Chris.Teo@sc.com

Sammi He

Communications Manager

Corporate Affairs, Brand & Marketing, Americas

Standard Chartered Bank

Tel: +1 862 448 8488

Email:Sammi.He@sc.com

KEYWORD: NEW YORK UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: ENVIRONMENT CONSULTING OTHER ENERGY BANKING PROFESSIONAL SERVICES ALTERNATIVE ENERGY ENERGY RETAIL SUPPLY CHAIN MANAGEMENT

SOURCE: Standard Chartered

Copyright Business Wire 2021.

PUB: 06/07/2021 12:22 PM/DISC: 06/07/2021 12:22 PM

http://www.businesswire.com/news/home/20210607005598/en