Yesterday, I attended the Carbon Disclosure Project (CDP) annual Supply Chain Members Roundtable. Cisco has hosted this meeting for several years using Cisco TelePresence rooms in our offices, this year in London, New York City, São Paulo, and San Francisco, with AT&T attending from their own Cisco TelePresence room in Denver.
Supply chain GHG emissions is a complex topic, but the biggest challenge is simple… appropriately “encouraging” suppliers to report their corporate emissions to CDP. I put “encouraging” in quotes because throughout the typical year, we see two views on supplier reporting (or any desired supplier action).
A lot of external stakeholders see reporting as a requirement, something to be demanded, as if failure to report can simply be corrected with larger sticks. If this sounds reasonable, just imagine your boss managing your performance similarly. Not much fun and not the way to sustained high performance.
For the last several years, Cisco has reported how many of our suppliers report to CDP. Table 12 of the Environment chapter of our 2012 CSR report shows 100 percent, 80 percent, and 93 percent of our manufacturing, component, and transportation partners, respectively (as measured by spend), now report to CDP.
A facsimile of the letter we sent last February to about 1500 of our suppliers and partners is provided in Appendix 2 of the Environment chapter (use the Acrobat bookmarks on the left). What have we learned about really encouraging suppliers?
- Be patient. Most companies are pretty big ships. They take a while to turn. Smaller suppliers have fewer resources to apply to new tasks. Big or small, reporting is a multi-year journey that begins with that famous first step.
- Set reasonable expectations. The CDP survey is Really Big. If suppliers first report just their Scope 1 and 2 emissions (fuel they own + electricity), that is a big win. Scope 1 and 2 emissions very directly correlate to cost, so it’s likely such reporting can be justified with the expectation of eventual cost reduction.
The first Reference document in Appendix 2 is our markup of the full CDP survey. We’ve highlighted the minimum questions needed to make sense of Scope 1 and 2 reporting. We concentrated on the “number questions.”
- Lead by example. A wonderful benefit of our reporting to CDP is that we think we’ve established credibility with our suppliers. We’re not asking anything of them that we don’t expect of ourselves. Of course, reporting also improves our knowledge of GHG emissions reporting, which helps us answer supplier questions on data collection, calculation and GHG emissions reporting.
- Share your vision. We list five long-term objectives in our letter to suppliers. This list signals a couple things. First, we’re committed. Our request isn’t a “one-and-done” request. We will be asking year after year. (We’re patient!) Second, we break a complex topic down into bite-size tasks, asking only a little bit more with each successful step.
We eventually want a high percentage of suppliers to complete all five steps listed, but we realize this is an effort measured in years, since that’s what it took Cisco. Right now, we’re focusing on Step 1, reporting to CDP annually, so that is the metric we report in our CSR report.
Now that reporting has reached critical mass in the three categories of suppliers listed in Table 12, we’ll be raising the bar in a couple ways:
- We’ll start tracking and reporting our metrics on Step 2, suppliers reporting publicly. For our preferred suppliers, we’ve already incorporated public reporting into our supplier scorecard. Public reporting means supplier information is available not just to Cisco, but to local and regional governments, analysts, academics and environmental advocacy groups. Suppliers will benefit—as has Cisco—from robust engagement with these stakeholders.
- We’ll continue to expand the types of suppliers we request to report to CDP. We want to fully characterize the CDP reporting status of our “ecosystem” of partners and suppliers, using our influence to promote energy efficiency and GHG emissions reduction.
Let us know what you think.