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52% of companies integrate climate risks into business strategy

The number of companies taking an industry-leading approach to tackling emissions in the supply chain has doubled in a year, according to data produced by CDP (formerly the Carbon Disclosure Project).

There is increasing awareness among organisations of the risks and opportunities associated with climate change and the need to set internal targets, including science-based targets, for reducing the company's carbon footprint. About three-quarters of 4,800 companies surveyed by CDP said that climate change risks could bring significant changes to their business, while more than two-fifths said they have board-level engagement with the risks associated with climate change. However, a company's carbon footprint extends beyond their operations and the energy they purchase (known as Scope 1 and 2 emissions) into the extended supply chain (Scope 3), but only 23 per cent of companies said they engage their own suppliers on emissions reductions. This suggests there's still a large gap between the leading companies and their suppliers.

Some of the findings of the report were:

  • 76 per cent of the 4,800 companies surveyed have identified inherent climate change risks that have the potential to generate a substantive change in their business;
  • 70 per cent have identified some climate change opportunities that could lead to a substantive change in their business;
  • 43 per cent report board-level engagement with and responsibility for climate change;
  • 42 per cent say they have integrated climate change into multi-disciplinary company-wide risk management processes;
  • 52 per cent report that they have integrated climate change into their business strategy;
  • 47 per cent of responding suppliers have an emissions or renewable energy target;
  • 20 per cent of responding suppliers indicated their emissions targets were science-based; and
  • 12 per cent of responding suppliers report consuming renewable energy.

The report also found good news on water management, with more companies showing awareness of water risks and 62 per cent setting company-wide targets for water management. There was weaker performance on deforestation risks, however, with need for deeper supplier engagement.

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