A Practical Approach to Greening the Electronics Supply Chain

® Results from the 2011 EICC Carbon and Water Reporting Initiative

1 2011 EICC Carbon & Water Reporting Initiative GREENING THE SUPPLY CHAIN

Results from the 2011 EICC® Carbon and Water Reporting Initiative

TABLE OF CONTENTS

4 Executive Summary

6 Context: Turning Risks into Opportunities Carbon and Water-Related Risks The Role of Supply Chains The Role of the ICT Industry The EICC Carbon and Water Reporting Initiative

10 2011 Findings and Results Overall Participation Response Comparisons to 2010 Results Participation by Geography Aggregated Results of Data

16 Next Steps Opportunities for Companies Next Steps for the EICC

18 Acronyms and Abbreviations

19 References

2 2011 EICC Carbon & Water Reporting Initiative

About This Report

Based on the ongoing efforts of the Electronic DISCLAIMER Industry Citizenship Coalition® (EICC®) Envi- The EICC publishes occasional papers as a con- ronmental Sustainability Work Group, the Car- tribution to understanding the role of business bon and Water Reporting Initiatve began in in society and the trends related to corporate 2009 as a pilot initiative and was revised and responsibility and responsible business prac- expanded in 2010 and 2011 to include a wider tices. The views expressed in this publication range of participants. The 2011 work on this are those of the author and do not reflect program included reviewing literature on those of individual EICC members. greenhouse gas emissions (GHG) and water footprinting; developing support resources, ABOUT THE EICC trainings, and tools; and collecting information The EICC was established in 2004 to improve provided by EICC members and their suppliers. social, economic, and environmental conditions in the global electronics supply chain The EICC recognizes the EICC Environmental through the use of a standardized code of Sustainability Work Group for their guidance conduct. The EICC was incorporated in 2007 as and support in 2011. The EICC also thanks Mar- an association to ensure greater awareness of sha Ali—a former co-lead of the EICC Environ- the EICC Code of Conduct and to expand its mental Sustainability Work Group—who adoption across the industry. Through the ap- played an instrumental role in developing the plication of shared standards, the EICC believes Carbon and Water Reporting Initiative and in better social, economic, and environmental provided key leadership throughout this initia- outcomes for all involved in the electronics tive. Finally, the EICC acknowledges participat- supply chain. The EICC includes more than 65 ing companies for contributing feedback, global electronics companies. For more infor- submitting data, and supporting this Initiative. mation or to view the EICC Code of Conduct, Any errors or inaccuracies that remain are visit www.eicc.info. those of the author alone. Please direct com- ments or questions to Jesse Nishinaga at © 2011 Electronic Industry Citizenship Coalition, [email protected], Sasha Radovich at Incorporated. All Rights Reserved. [email protected], or Wendy Dittmer at [email protected].

2011 EICC Carbon & Water Reporting Initiative 3 GREENING THE SUPPLY CHAIN

Executive Summary

The role of industry and supply chain networks—the web of business relationships and interdependencies—in addressing carbon emissions and water-related risks has never been more critical.

The information and communication technol- porting Initiative is a straightforward, low- ogy (ICT) industry has a powerful role to play cost, standardized process for directly engag- in mitigating carbon and water-related risks, ing with suppliers to aggregate their green- from introducing products that emit less car- house gas emissions and water-related data bon, create less waste, and use less water and into a central repository that their enterprise resources mitigating carbon emissions and customers can access. water-related risks through optimizing indus- trial processes. Regardless of the solution, a In 2011, the EICC built on the successes and key component to achieving reductions is to lessons learned from the 2009 and 2010 initia- have a clearer understanding of where emis- tives by expanding its focus on water report- sions are originating and how water is being ing and providing aggregated analysis of the sourced, used, and discharged. The EICC® rec- carbon data received from suppliers. The EICC ognized this need for action and made the also increased the maximum number of sup- case that supply chain networks—the heart of pliers that enterprise customers could invite to the electronics industry—can play a more di- the Carbon and Water Reporting Initiative to rect role in responding to carbon and water- 250 (up from 100 suppliers in 2010). related risks and also provide critical information and insights that enable other indus- The EICC continues to serve both users of the tries and sectors to make similar advances. Carbon and Water Reporting Initiative by providing optional trainings; translating many With investors, governments, nongovernmen- of the tools and documents into Chinese and tal organizations, and consumers asking com- Spanish to accommodate non-English- panies to measure and publically disclose their speaking suppliers; and providing the option greenhouse gas emissions, the EICC devised for suppliers to submit a copy of their Carbon the Carbon and Water Reporting Initiative to Disclosure Project (CDP) questionnaire in lieu meet these expectations, help companies in- of completing the EICC questionnaire.1 crease their transparency, and ultimately strengthen business-to-business collabora- 1 The CDP is an independent nonprofit organization tions. Specifically, the Carbon and Water Re- that operates a global carbon disclosure reporting system.

4 2011 EICC Carbon & Water Reporting Initiative

In 2011, 32 companies participated as “customers” in the Carbon and Water Reporting Participating Companies Initiative, inviting 2,631 suppliers (resulting in 1,032 unique suppliers) to complete the ques- • Acer • Advanced Micro Devices tionnaire. Of those 1,032 unique suppliers in- • Analog Devices vited, 289 suppliers responded, up from 251 • Applied Materials* suppliers in 2010. An analysis of the responses • Celestica produced several key takeaways: • Dell • EMC Corporation* • Fabrinet Suppliers continued to share their data • Foxconn with multiple customers. In 2011, sup- • Hewlett Packard* pliers on average shared their data with • Hitachi GST* 6.0 customers, compared to 4.3 cus- • HTC Corporation tomers in 2010. • IBM • Intel Although the total supplier response • Jabil* rate declined to 28 percent in 2011 • Lenovo* (from 37 percent in 2010), one custom- • LG Electronics er achieved a supplier response rate of • Logitech 88 percent, demonstrating that proac- • LSI Corporation* • Microsoft tive engagement with suppliers can • ModusLink have a positive effect on supplier partic- • NVIDIA* ipation. • ON Semiconductor Twenty-six percent of suppliers provid- • Oracle America

ed a copy of their CDP questionnaire as • Pegatron • Sanmina-SCI their response to the 2011 Carbon and • Seagate Technology Water Reporting Initiative, up from 20 • Skyworks percent in 2010. • Sony Corporation • Western Digital

In addition, an analysis of the suppliers’ ag- • Xerox* • XP Power gregated carbon data produced several key takeaways: *These companies have participated in all three years of the Carbon Reporting Scope 1 emissions accounted for 23 System (2009, 2010) / Carbon and Water Reporting Initiative (2011). percent of total Scope 1 and 2 global GHG emissions; Scope 2 emissions accounted for 77 percent. Increasing the overall value of the Carbon and Using estimated annual revenues to Water Reporting Initiative for customers and normalize data, the global carbon in- suppliers remains a priority for the EICC. As the EICC strives for continuous improvement tensity average was 311.8 MtCO2e (per million US dollars). For Scope 1 alone, of the Carbon and Water Reporting Initiative the global average was 71.94 MtCO2e in 2012 and beyond, new ideas will be explored and enhancements will be made to improve For Scope 2, it was 239.83 MtCO2e. the overall value of this tool and reporting process.

2011 EICC Carbon & Water Reporting Initiative 5 GREENING THE SUPPLY CHAIN

Context: Turning Risks into Opportunities

As climate change continues to shift ecosystems, marketplaces, and stakeholder needs, companies are becoming more aware of the business implications of climate change and water- related risks, and are taking steps to turn these risks into opportunities.

In the 2011 International Energy Outlook, the porting Standard was introduced by the U.S. Energy Information Administration pro- Greenhouse Gas Protocol to help companies jected that by 2035, world energy-related car- understand their value chain emissions using bon dioxide emissions will rise to 43.2 billion an internationally accepted method.3 As the metric tons from 30.2 billion metric tons in adoption of this standard improves over time, 2008 (Figure 1). Additionally much of the in- investors and stakeholders will have a way to crease in emissions will be driven by develop- compare companies’ depth of understanding ing nations outside the Organisation for of value chain GHG management.4 Economic Cooperation and Development (OECD) due to their expected strong econom- Figure 1. World energy-related carbon dioxide emissions, 1990-2035 (billion metric tons) ic growth and continued heavy dependence on fossil fuels.2 With industry playing a central role in driving economic growth in many of these locations, companies have the opportunity to alleviate climate change and create shareholder and stakeholder value simultane- ously.

While having an effective GHG-reducing energy strategy can help companies reduce risks and create opportunities in order to gain competitive advantage, companies must rec-

ognize the importance of looking beyond their 3 The Greenhouse Gas Protocol, “Corporate Value Chain own operations. In October 2011, the Corpo- (Scope 3) Accounting and Reporting Standard,” October 2011, rate Value Chain (Scope 3) Accounting and Re- http://pdf.wri.org/ghgp_corporate_value_chain_scope _3_standard.pdf 4 Schuchard, Ryan, “The Best Features of the New 2 U.S. Energy Information Administration, Scope 3 Emissions Standard,” GreenBiz.com, October “International Energy Outlook 2011,” September 2011, 2011, http://www.greenbiz.com/blog/2011/10/28/best- http://www.eia.gov/forecasts/ieo/emissions.cfm features-new-scope-3-emissions-standard?page=0%2C1

6 2011 EICC Carbon & Water Reporting Initiative

Water-Related Business Risks While much awareness has been raised on the impacts of climate change and greenhouse gas emissions, less attention has been focused on the impacts of water scarcity and water quality risks, and the connection between water and energy.5 According to the 2008 report Climate Change and Water published by the Intergovernmental Panel on Climate Change, “observational records and climate projec- “Observational records and climate tions provide abundant evidence that fresh- projections provide abundant water resources are vulnerable and have the evidence that freshwater resources potential to be strongly impacted by climate are vulnerable and have the potential change, with wide-ranging consequences for to be strongly impacted by climate human societies and ecosystems.”6 change, with wide-ranging consequences for human societies

and ecosystems.” Water is an important resource in the daily operations of companies. Identifying the im- Source: Intergovernmental Panel on Climate pacts of water-related business risks is there- Change, 2008 fore vital. Water Scarcity & Climate Change: Growing Risks for Businesses and Investors, a Ceres Report authored by the Pacific Institute, addressing their own carbon and water foot- describes the physical, reputational, and regu- prints and by engaging with suppliers to ad- latory risks on businesses across many indus- dress theirs. tries including the electronics industry. Water- related risks, for example, pose a significant The Role of Supply Chains8 threat to IT manufacturing particularly in plac- The complexity and scale of the global climate es where water resources are already under change challenge demands a collaborative stress.7 response. Supply chains are a key focus area

for reducing carbon emissions and rising ener- Both climate change and water-related busi- gy demand and water-resource challenges. A ness risks can have negative impacts to the supply chain-based approach to energy and entire business value chain. Companies can water management is critical for several rea- begin to turn these risks into opportunities by sons.

5 Morrison, Jason, et al., “Water Scarcity & Climate First, at the individual company level, a com- Change: Growing Risks for Businesses & Investors,” pany’s total energy and water usage is more Ceres and the Pacific Institute, February 2009, http://www.pacinst.org/reports/business_water_climat likely to come from its supply chain than from e/full_report.pdf its owned operations. 6 Intergovernmental Panel on Climate Change, “Climate Change and Water,” June 2008, http://www.ipcc.ch/pdf/technical-papers/climate- 8 Portions of our 2010 report, “A Practical Approach to change-water-en.pdf Greening the Electronics Supply Chain: Results from the 7 Morrison, Jason, et al., “Water Scarcity & Climate 2010 EICC Carbon Reporting System Initiative” have Change: Growing Risks for Businesses & Investors,” been updated, abbreviated, and inserted into the next Ceres and the Pacific Institute, February 2009 three subsections.

2011 EICC Carbon & Water Reporting Initiative 7

9 Second, at the industry level, climate change it is estimated to reach 1.43 GtCO2e. While and water-related risks could change market similar projections could not be found for wa- dynamics. In the ICT industry, there is a strong ter, companies can assume that the industry’s interdependency among companies, and min- need for water will increase as both the indus- imizing these risks for any one company re- try and the demand for ICT grows in size and quires working across a network of breadth, particularly in emerging and develop- relationships. ing economies.

Third, at the global level, supply chains play a The EICC Carbon and Water critical role in achieving national and suprana- Reporting Initiative tional reduction targets. The EICC envisions a world in which standardized data is passed between companies and Finally, supply chains provide an opportunity suppliers up and down the supply chain easily, to make a practical and tangible impact imme- efficiently, and accurately. This will increase diately. Unlike a regulatory approach, which the transparency of manufacturing electronic can take years to put into effect, a supply products and encourage business-to-business chain approach can be implemented immedi- collaboration on emissions and energy effi- ately. ciency and water use improvement efforts.

The Role of the ICT Industry The EICC designed the Carbon and Water Re- The ICT industry has a role to play in helping porting Initiative to spur global action from other industries and sectors reduce their car- ICT companies on energy and water manage- bon emissions and water usage. This is not ment within supply chains and increase trans- only a prime sustainability opportunity for the parency via a standardized method of sharing ICT industry, but it is also a key business op- data among companies.10 portunity for ICT companies to build innova- tive products that have lower carbon In 2011, the Carbon and Water Reporting footprints and require less water to use. Initiatve continued to focus on carbon reporting but also increased the number of water- But while the ICT industry is often viewed as a related questions. In 2010, suppliers were solutions provider, it must also consider its asked broadly to confirm whether they cur- own carbon emissions and water footprint to rently tracked their water use, what their es- talk credibly about making reductions. In 2007, timated total water use was for the year, and the “embodied” carbon (the resulting carbon whether they maintained any water use re- emissions associated with manufacturing, duction targets or efficiency goals. The 2011 distribution, and disposal), combined with the Carbon and Water Reporting Initiative ex- footprint from use of ICT products, accounted

for about 0.83 GtCO2e, or 2 percent of the estimated total emissions from human activity 9 The Climate Group, “Smart 2020: Enabling the Low released that year. This figure is expected to Carbon Economy in the Information Age,” 2008 10 grow at 6 percent each year until 2020, when Details about the program objectives, assumptions, and system design can be found at: http://www.eicc.info/documents/APracticalApproachto GreeningtheElectronicsSupplyChain_000.pdf

8 2011 EICC Carbon & Water Reporting Initiative panded the water section to include questions Policy on wastewater treatment prior on: to discharge The annual volume of water discharged Having a company-wide water strategy, from the company to destination plan, or policy Use of national or regional water dis- Having a company policy on its discharge standards charges Seasonal droughts or periods of dry The amount of water withdrawn for use wells, scarcity (lack of) clean water in in the company by source the local area, and/or flooding due to The annual volume of water recycled or rising surface waters during the last five re-used in the company years The annual volume of water used by location or purpose

2011 EICC Carbon & Water Reporting Initiative 9 GREENING THE SUPPLY CHAIN

2011 Findings and Results

The 2011 Carbon and Water Reporting Initiative response rates shows a range of response built on the successes and lessons learned rates, from 0 percent to 88 percent (Figure 2). from the 2010 Carbon Reporting System and the 2009 pilot. The analysis of the data is divid- Carbon Reporting ed into three areas: overall participation re- Responses in the area of carbon reporting response, participation by geography, and flected the following key statistics: aggregated results of the carbon emissions data. Responding suppliers have been meas- uring annual GHG emissions for an aver- Overall Participation Response age of 3.3 years Thirty-two of 60 EICC member companies par- 43 percent of suppliers measured and ticipated as “customers” in the 2011 Carbon reported their emissions for the first and Water Reporting Initiative. 11 Customers time and 23% of suppliers have meas- were asked to submit a list of suppliers (up to ured and reported their emissions for 250) to query for carbon emissions- and water- five or more years. 12 related data. To maintain confidentiality of 88 percent of suppliers provided Scope business relationship, BSR, our third-party tool 1 emissions data.13 administrator, gathered and consolidated the 94 percent of suppliers provided Scope supplier lists. 2 emissions data; of these, 9 percent ei- ther purchased electricity from renewa- In total, 2,631 suppliers were nominated for ble sources (e.g., solar) or generated inclusion, of which there were 1,032 unique electricity on-site from renewable suppliers after removing duplicate suppliers. sources. Of the 1,032 suppliers queried, 289 returned questionnaires, resulting in a 28 percent re- 12 Out of 161 responses. sponse rate. A distribution of the customer 13 For detailed definitions of Scope 1, 2, and 3, view Chapter 4 of “A Corporate Accounting and Reporting Standard,” The Greenhouse Gas Protocol, Revised Edi- tion, 11There were 60 EICC members at the time the http://www.ghgprotocol.org/files/ghgp/public/ghg- invitations were sent. protocol-revised.pdf

10 2011 EICC Carbon & Water Reporting Initiative Figure 2. Distribution of Supplier Participation Rates

31 percent of suppliers provided Scope 3 86 percent of suppliers reported the emissions data. total amount of water withdrawn for 28 percent of suppliers provided all use by source. three scope emissions data. 39 percent of suppliers reported the 61 percent of suppliers reported having total amount of water recycled or re- emissions reduction targets. The targets used. reflected a mixture of absolute reduc- 77 percent of suppliers reported the tion in emissions and reduction of emis- total amount of water used by location sions per product unit.14 or purpose. 81 percent of suppliers disclosed opera- 54 percent of suppliers reported the tional information (i.e., estimate of average amount of wastewater treated global revenue). This information can be per day. used to normalize their emissions data.15 71 percent of suppliers reported the 13 percent of suppliers reported obtain- total amount of water discharged by ing third-party verification of their da- destination. ta.16 52 percent of suppliers reported having a company-wide water strategy, plan, or Water Reporting policy. Despite the expanded focus on water man- 53 percent of suppliers reported having agement in the 2011 Carbon and Water Report- water reduction targets or goals that ing Initiative, the response rate varied for each apply to production/manufacturing. question:17 53 percent of suppliers reported having water reduction targets or goals that

14 Out of 211 EICC questionnaire submissions. apply to non-production use (e.g., offic- 15 Ibid. es, data centers). 16 Ibid. 17 All results in this section are out of 216 EICC 39 percent of suppliers reported having questionnaire submissions; for five of these water recycling or reuse targets that submissions, the CDP questionnaire was used to apply to production. provide carbon data and the EICC questionnaire was used to provide water-related data.

2011 EICC Carbon & Water Reporting Initiative 11

Results: By the Numbers 88 percent of suppliers reported having to meet national or regional water discharge standards.

32 Comparisons to 2010 Results companies queried their suppliers In comparing 2011 results to 2010 results, there were three main takeaways:

1. While total customer and supplier participation increased, their participation 2,631 rates declined. The participation rate of suppliers were nominated for inclusion “customers” declined to 53 percent in 2011 from 63 percent in 2010, although 1,032 the total number of customers in- were unique companies (removing creased to 32 companies in 2011 from 27 duplicate submissions) companies in 2010 (Figure 3).

In terms of supplier participation, 289

suppliers participated in the 2011 Carbon and Water Reporting Initiative com- 289 pared with 251 suppliers in 2010, a 15 suppliers submitted a questionnaire percent increase. However, while the (and signed a terms-and-conditions form) to be shared with at least one total number of responses increased for enterprise customer suppliers, the response rate declined from 37 to 28 percent. This decline in the supplier response rate may have been a result of expanding the maxi- On average, a supplier shared its mum number of suppliers that custom- questionnaire with ers could invite to the program (Figure 4).

6.0 companies 2. Suppliers continued to share data with more companies. On average, a responding supplier in 2011 shared its data with 6.0 companies, up from 4.3 com- 34 percent of suppliers reported having panies in 2010. This improvement pro- water recycling or reuse targets that vides additional evidence that custom-

apply to non-production use. ers and suppliers are seeing the benefit 59 percent of suppliers reported treat- of taking a coordinated approach via ing production / manufacturing the Carbon and Water Reporting

wastewater prior to discharge. Initiative. 55 percent of suppliers reported treat- ing sanitary wastewater prior to discharge.

12 2011 EICC Carbon & Water Reporting Initiative Figure 3. Customer Participation

questionnaires received increased to 76 34 65% in 2011 from 51 in 2010, a 49 percent in- 63% crease. 32 60% 32 30 55% Participation by Geography 28 53% Responses reflected the following key statis- 26 27 50% tics:

24 45% Carbon Responses 2010 2011 Across all three emission scopes, the majority of supplier responses came from Asia, fol-

Figure 4. Supplier Participation lowed in order by North America, Europe, and the Middle East. Here are the key highlights: 300 40% 37% 290 For Scope 1 and 2 reporting, the top 3 280 30% 28% countries that provided supplier re- 270 20% sponses were the United States , China, 260 289 and Taiwan, followed by Japan, Thailand, 250 10% 240 251 and Malaysia (Figure 5). 230 0% For Scope 3 reporting, the top 2 coun- 2010 2011 tries that provided supplier responses were the United States and Japan, followed by Taiwan and Malaysia. 3. The option to provide a copy of the CDP Scope 3 reporting was noticeably weak- submission continued to increase par- er in Asia, driven primarily by China, ticipation. Twenty-six percent of suppli- where only 9 percent of suppliers from ers that submitted a response to the China provided Scope 3 data (compared 2011 Carbon & Water Reporting Initiative with, for example, the United States, provided a copy of their CDP question- where 40 percent of suppliers provided naire; the remaining 74 percent of sup- Scope 3 data). pliers submitted a completed EICC questionnaire. The total number of CDP

Figure 5. Percentage of Carbon Responses by Scope (for Top 6 Responding Countries)

Region Scope 1 Scope 2 Scope 3 United States 29 29 35 China 18 21 5 Taiwan 14 13 11 Japan 9 10 16 Thailand 9 9 5 Malaysia 8 8 11

2011 EICC Carbon & Water Reporting Initiative 13

Figure 6. Percentage of Supplier Water Responses by Question (for Top 6 Responding Countries)

United Question China States Taiwan Thailand Malaysia Japan Water with- 24 18 15 12 10 10 drawn for use Water recycled 19 13 21 13 6 13 or reused Water used 23 16 17 13 10 8 Wastewater 23 12 19 12 12 14 treated per day Water discharged 23 16 16 13 10 11

Water Responses Overall, Asia did well in terms of providing wa- The majority of suppliers that provided water- ter-related data, while North America, driven related data came from Asia, followed in order primarily by the United States, was noticeably by North America, Europe, and the Middle East. weaker. For example, only 24 percent of sup- Here are key results: pliers from the United States provided data for total amount of water recycled or reused. Total amount of water withdrawn: the Likewise, only 56 percent of suppliers provided top two countries with suppliers that data for total amount of water discharged. provided this data were China and the These numbers can be compared with, for ex- United States, followed by Taiwan and ample, Japan, where 55 percent of suppliers Thailand (Figure 6). provided data for total amount of water recy- Total amount of water recycled or re- cled or reused and 85 percent provided data used: the top two countries with suppli- for total amount of water discharged. ers that provided this data were Taiwan and China, followed by the United One possible explanation for this difference is States, Thailand, and Japan. the mix or type of suppliers that are repre- Total amount of water used: the top sented in each of these country groups. In the country with suppliers that provided case of the United States, responding suppliers this data was China, followed by Taiwan may be businesses that are inherently different and the United States. than those represented in other countries, Average amount of wastewater treated particularly in Asia. Another possible explana- per day: the top two countries with tion for this difference is the level of water suppliers that provided this data were measurement and reporting advancement China and Taiwan, followed by Japan. among responding suppliers from the United Total amount of water discharged: the States. To confirm any of these possible expla- top country with suppliers that provided nations, future Carbon and Water Reporting this data was China, followed by the Initiatives should collect and analyze responses United States and Taiwan. by business type.

14 2011 EICC Carbon & Water Reporting Initiative

Aggregated Results of Carbon Data Asia as region was the most carbon in-

One of the objectives of the 2011 Carbon and tense at 487.8 MtCO2e. Water Reporting Initiative is to analyze the Europe’s carbon intensity was 177.7 aggregated carbon emissions data received MtCO2e, and North American’s carbon from suppliers and set a baseline for future intensity, driven by the United States, 21 emissions reduction targets and improvements was 30.5 MtCO2e. efforts.18 It is important to note, however, that Across countries, China was the most all regional and country comparisons are lim- carbon intense at 1,698.4 MtCO2e, fol- ited to the scope of the data reported, and lowed by Japan at 436.4 MtCO2e and thus, may not be statistically significant. The South Korea at 394.4 MtCO2e (Figure 9). key highlights include: Figure 7. Total Global GHG Emissions by Scope Absolute Emissions (million MtCO2e) (n=167)

Scope 1 emissions accounted for 23 per-

cent of total Scope 1 and 2 global GHG emissions; Scope 2 emissions accounted for 77 percent (Figure 7). Scope 1

17.64 Representing 76 percent of all responding suppliers, Asia as a region collective-

ly produced 71.7 million MtCO2e, or 94 Scope 2 percent of the total reported Scope 1 58.79 19 and 2 global GHG emissions. At the country level, suppliers in China collectively produced the most GHG Figure 8. Total GHG Emissions for Top 5 Emitting emissions (Scope 1 and 2) at 30.3 million Countries, and their Carbon Intensities (in MtCO2e, followed closely by Japan at MtCO2e per Million USD) 29.3 million MtCO2e (Figure 8). GHG Carbon Carbon Intensity20 Country Emissions* Intensity Using estimated annual revenues to China 30.3 1,698.4 normalize data, the global carbon inten- Japan 29.3 436.4 sity average was 311.8 MtCO2e (per mil- Taiwan 5.8 190.5 lion US dollars). For Scope 1 alone, the S. Korea 4.1 394.4 global average was 71.94 MtCO2e. For United 2.6 30.5 Scope 2, it was 239.83 MtCO2e. States

*Includes Scope 1 and 2 emissions (million 18 We do not aggregate or analyze water volume data MtCO2e) for this year’s initiative and report as 2011 was considered a pilot year.

19 Asia region includes China (includes Hong Kong), Taiwan, Japan, South Korea, Thailand, Malaysia, Singapore, Philippines, and India. 20 Carbon intensity was calculated by dividing Scope 1 and 2 emissions by the total aggregated estimated annual revenues; 167 suppliers provided estimates of their annual revenues. 21 Europe includes Germany, Netherlands, and Ireland.

2011 EICC Carbon & Water Reporting Initiative 15 GREENING THE SUPPLY CHAIN

Next Steps

The 2011 Carbon and Water Reporting Initiative other regions with high carbon intensities to continued to demonstrate the benefits of a look for specific risks and opportunities and set simple, low-cost, and standardized approach the context for future supplier engagements. that reduces the likelihood of redundant and conflicting requests for supplier data. With Another opportunity for companies is to de- nearly 43 percent of supplier respondents re- termine which supplier(s) are the least carbon porting for the first time in 2011, the Carbon intense. Once these suppliers have been identi- and Water Reporting Initiative was particularly fied, companies can consider engaging with useful for suppliers new to carbon and water them to learn about their policies, practices, footprinting and reporting. and methodologies in order to develop best practices that can be shared with other suppli- Opportunities for Companies ers and members. In 2011, the EICC aggregated and analyzed supplier data for the first time with the goal of Last, but not least, companies also can collabo- providing learnings that could inform and po- rate with energy and electricity suppliers (e.g., tentially guide EICC members and suppliers to utilities, renewable energy providers, etc.) to make future improvement efforts. While more reduce Scope 2 emissions. With Scope 2 emis- supplier data from multiple years is required to sions representing approximately 77 percent validate the analysis and determine any signifi- of the total reported global GHG emissions, the cant industry trends, some early suggestions opportunity for companies to reduce Scope 2 can be made based on the data that was col- emissions is significant. lected and aggregated in 2011.

For instance, China, with the highest country-

level carbon intensity of 1.698.4 MtCO2e per million USD, is a prime country for targeting future improvement efforts. Therefore, EICC members should consider reviewing their suppliers from China, as well as suppliers from

16 2011 EICC Carbon & Water Reporting Initiative

carbon and water footprinting and report- Next Steps for the EICC ing; energy efficiency; and emissions man- Learning from the 2011 Carbon and Water Re- agement. This might take the form of porting Initiative, opportunities continue to trainings offered in additional languages, or exist, from streamlining the overall reporting customized to suppliers’ existing process t providing more aggregated, industry- knowledge or skill-level in carbon and wa- level analysis. Therefore, the EICC will consider ter footprinting. the following in 2012 and beyond: Continue to align the EICC’s reporting time- lines and questions with other recognized Transition to a web-based approach to data disclosure dates and frameworks. reporting (starting in 2013). Build on the aggregated analysis that was In conclusion, the EICC continues to encour- conducted in 2011 and develop more robust age companies to develop policies, strategies, insights and recommendations that can in- targets, and practices that reduce their carbon form companies and suppliers in making emissions. The EICC is also committed to en- specific emissions reduction improvements. couraging companies to understand and ad- Streamline the data reporting and terms- dress water-related business risks. The EICC and-conditions process. and its members hope that the increased data, Evolve the reporting methodology(ies) transparency, and analysis facilitated through used to address common challenges like al- these initiatives will facilitate significant im- location and product- versus supplier-level provements in the environmental operations data. of companies and their suppliers around the Provide additional training and coaching in world.

2011 EICC Carbon & Water Reporting Initiative 17 GREENING THE SUPPLY CHAIN

Acronyms and Abbreviations

CDP: Carbon Disclosure Project EICC: Electronic Industry Citizenship Coalition GHG: Greenhouse gas ICT: Information and communication technology

MtCO2e: Metric ton carbon dioxide equivalent OECD: Organisation for Economic Cooperation and Development

18 2011 EICC Carbon & Water Reporting Initiative

References

Intergovernmental Panel on Climate Change, “Climate Change and Water,” June 2008, http://www.ipcc.ch/pdf/technical- papers/climate-change-water-en.pdf

Morrison, Jason, et al., “Water Scarcity & Climate Change: Growing Risks for Businesses & Investors,” Ceres and the Pacific Institute, February 2009, http://www.pacinst.org/reports/business_water_climate/full_report.pdf

The Climate Group, “Smart 2020: Enabling the Low Carbon Economy in the Information Age,” 2008

The Greenhouse Gap Protocol, “A Corporate Accounting and Reporting Standard,” Revised Edition, http://www.ghgprotocol.org/files/ghgp/public/ghg-protocol-revised.pdf

The Greenhouse Gas Protocol, “Corporate Value Chain (Scope 3) Accounting and Reporting Standard,” October 2011, http://pdf.wri.org/ghgp_corporate_value_chain_scope_3_standard.pdf

Schuchard, Ryan, “The Best Features of the New Scope 3 Emissions Standard,” GreenBiz.com, October 2011, http://www.greenbiz.com/blog/2011/10/28/best-features-new-scope-3-emissions-standard?page=0%2C1

U.S. Energy Information Administration, “International Energy Outlook 2011,” September 2011, http://www.eia.gov/forecasts/ieo/emissions.cfm

2011 EICC Carbon & Water Reporting Initiative 19

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