Supply Chain Energy Initiatives ‘Putting Pressure’ on Suppliers

Initiatives by firms such as Tesco and Walmart and recent research by bodies including the University of Minnesota Institute highlight the impact suppliers within a supply chain have on a company’s energy footprint, but research by renewable energy company Urban Wind suggests that policies targeting vendors’ energy use are piling pressure on suppliers.

As being green becomes an increasing priority for businesses, companies across the UK are now having to respond to the challenge or face missing out on contracts, according to Corporate Social Responsibility and Sustainability – An Insight.

The trend is being driven by legislation as well as shareholder and consumer pressure, according to Urban Wind managing director Phil McVan.

For instance, food sector business Bernard Matthews is set to hit its deadline for becoming an energy neutral business three years ahead of target, bosses have predicted. It has been developing a pioneering partnership with renewable energy developers, securing £90 million ($139 million) of third party investment to utilize the land it owns to house solar and wind farms.

It’s a corporate trend that Urban Wind sees is developing, according to its research data, with companies such as BT also keen to buy green energy.

However, according to McVan, they are passing that burden right down the supply chain – with smaller operations being told by the major companies they supply of the pressing need for them to embrace the “green agenda” and switch to renewables or possibly lose their place on that supply chain. But with costs in the millions many suppliers are feeling the pinch, the research suggests.

In June, UK grocery giant Tesco’s sustainable supply chain initiative Knowledge Hub added its 1,500th member: Müller Wiseman Dairies, Britain’s biggest fresh milk firm.

Launched in 2010, the Tesco Knowledge Hub aims to help to reduce the energy costs, waste and environmental impacts of the products Tesco buys, and aims to cut 30 percent of the carbon emissions from the company’s supply chain by 2020, compared to 2006-07 levels. The private, online community curently includes supplier members from more than 630 global companies, plus independent experts, Tesco representatives and partners including WRAP, IGD and the Carbon Trust.