CDP’s Supplier Engagement Rating – What You Need to Know Posted February 2, 2017 by Jessica Lab On January 24, CDP released its Global Supply Chain Report 2017, Missing link: Harnessing the power of purchasing for a sustainable future. This report presents the results of the 2016 CDP supply chain reporting year. CDP supply chain is a program designed to help buyers understand and manage climate-related risks, opportunities and performance of their suppliers. One new addition to the CDP supply chain program during the 2016 reporting year was the “Supplier Engagement Rating.” Here is what you need to know about the rating as well as a few suggestions for maximizing your company’s score. What is it? The CDP Supplier Engagement Rating is a new scoring system that evaluates the supplier engagement practices of companies responding to the supply chain questionnaire. The goal of the rating is to reduce emissions in global supply chains by increasing supplier engagement. The new rating was developed in response to the finding that less than one quarter of CDP supply chain respondents reported that they engage with suppliers on climate change issues. No new questions were added to the CDP supply chain questionnaire for this rating. CDP instead scored certain supply chain questions differently, which we describe below. Who is eligible? All companies that respond to the CDP supply chain questionnaire, except small and medium size enterprises (SME), were scored in 2016 against the Supplier Engagement Rating criteria. For this first year of the program (2016), only leading companies were publicly recognized (e.g., those companies that achieved the highest scores) and all other company scores remained private. Of the 3,300 companies evaluated, only 28 were recognized as leaders or less than 1% of companies scored. The Global Supply Chain Report 2017 contains all companies named to the 2016 supplier engagement leader board, with Consumer Discretionary and Industrials the most represented sectors. How is it scored? Supplier engagement scores are determined based on evaluation of four key areas (governance, measurement, ambition and supplier engagement) of the climate change module in the supply chain response as well as the score on the climate change module. Each of the categories are weighted to determine their impact on the rating. The 2016 Supplier Engagement Rating Methodology, published by CDP in June 2016 provides more detail on the scoring methodology and how points are allocated to each question across the four key areas. How to maximize your score. Six questions across the four key areas, in addition to the score on the climate change module, are used to determine the engagement rating. With publication of the 2016 ratings and leader board, we have reassessed CDP’s scoring criteria and developed suggestions to maximize your company’s own Supplier Engagement Rating during the upcoming 2017 reporting year. 1.2a: Ensure that there are monetary incentives, such as bonuses, in place for using environmental criteria in purchasing decisions or supply chain engagement. These incentives should be available to buyers or all employees including the chief purchasing officer or chief financial officer. Non-monetary incentives, such as awards, may receive fewer points. 3.1a, b: Set an absolute or intensity target that includes upstream Scope 3 greenhouse gas (GHG) emissions. For example, a goal to reduce purchased goods and services (Category 1) GHG emissions or a target that addresses Scope 1, 2 and 3 GHG emissions concurrently. 14.1: Calculate and report all relevant upstream Scope 3 GHG emissions categories, especially purchased goods and services. All of the rows for the first eight Scope 3 GHG categories should be completed. 14.4: Engage your suppliers on climate change. This can include questionnaires, quarterly or annual business reviews, RFP questions and other methods. 14.4b: List the number of suppliers and the total percent of spend that those suppliers represent and aim to engage suppliers constituting at least 50% of enterprise spend. 14.4c: Explain how you use climate change related supplier performance data, such as making purchasing decisions or creating scorecards. CDP climate change score: Points are awarded relative to the respondent’s score on the CDP climate change module, with full points being awarded for a score of A. Check out our whitepaper, Making the Most of CDP Climate Change, for more on how to increase your score. What’s next? By utilizing the tips outlined above you can increase your CDP Supplier Engagement Rating and craft a plan towards a more meaningful and impact supplier relationship. Article contributor includes Kealy Herman.