Two of the biggest companies in the US will be collecting more information on carbon emissions and other sustainability data from the largest sources of emissions for most corporations: their supply chains.
Ford says it will more than triple the number of suppliers that it surveys on their energy use and carbon emissions. Ford will survey 128 suppliers, representing 60% of its $65 billion in annual purchases. The companies supply vehicle production parts and components, information technology, and logistics services.
And Microsoft says that starting in 2013, it will require a cross section of suppliers to submit reports on their adherence to Microsoft’s Vendor Code of Conduct, which includes social and environmental policies. The information will be published in Microsoft’s annual Citizenship Report.
As much as 60% of corporate greenhouse gas emissions originate in supply chains, according to an analysis of corporate emissions published by McKinsey Quarterly. But because collecting information on supplier emissions is challenging, reporting on so-called scope 3 emissions has lagged behind that of emissions directly generated by company operations.
Microsoft says its vendors will also report on other standards outlined in its Vendor Code of Conduct, including legal compliance, business ethics, labor and human rights, and respect for intellectual property. The company says it hopes the program will drive sustainability improvements throughout its supply chain.
"This new reporting requirement will help shareholders, customers and others understand how Microsoft and its suppliers are meeting their expectations for social responsibility," says Brad Smith, general counsel and executive vice president of Legal and Corporate Affairs for Microsoft.
New York City Comptroller John Liu filed a shareholder proposal with Microsoft on behalf of the New York City Pension Funds, which resulted in the supplier program.
"Microsoft has taken an important step to promote sustainability and transparency among its global suppliers," says Liu. "If more firms showed such leadership it would hold more suppliers accountable for protecting human and workers’ rights, and reduce the legal and reputational risks that companies and their shareholders face. The New York City Pension Funds are taking this proposal to other companies and expect that they will follow the prudent path Microsoft has chosen."
As part of the reporting process, Microsoft will encourage its suppliers to consider using Global Reporting Initiative guidelines, the leading framework for corporate sustainability reporting.
Ford’s announcement is the latest in recent sustainability efforts by the company. In April, Ford said that with the help of two suppliers it had converted over four million pounds of carpet into cylinder head covers. And in July, along with its supplier Recycled Polymeric Materials, Ford announced it would combine discarded tires with bio-renewable content to make seals and gaskets.
Here’s Microsoft’s 2011 Citizenship Report:
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