Singapore-based suppliers that fail to cut emissions may lose US$146.6b in annual revenue: survey

SINGAPORE-BASED suppliers stand to lose US$146.6 billion in annual export revenue if they fail to cut carbon emissions in line with multinational corporation (MNC) clients' net zero plans, according to a Standard Chartered (StanChart) survey released Tuesday.

It said 91 per cent of MNCs with a supply chain in Singapore have set emission reduction targets for their suppliers, asking for an average reduction of 30 per cent by 2025.

In total, the study surveyed 400 sustainability and supply chain experts at MNCs and covered 12 markets, including eight in Asia. It found that supply chain emissions account for an average of 73 per cent of MNCs' total emissions and that 78 per cent of MNCs plan to remove suppliers that endanger their carbon transition plan by 2025.

Additionally, two-thirds (67 per cent) of MNCs said tackling supply chain emissions is the first step in their net-zero transition as opposed to reducing their own carbon output.

An estimated 15 per cent of MNCs have already begun removing suppliers that might scupper transition plans.

MNCs expect to exclude 35 per cent of their current suppliers as they move away from carbon, StanChart said.

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To help suppliers with reducing their carbon footprint, MNCs indicated they would spend more on net-zero products and services. Some 45 per cent said they would pay a premium of 7 per cent on average for a product or service from a net-zero supplier.

About 47 per cent of MNCs are offering preferred supplier status - a sales advantage - to sustainable suppliers, and 30 per cent are offering preferential pricing, according to the survey.

Some MNCs are offering grants or loans to their suppliers to invest in the reduction of emissions (18 per cent) or data collection (13 per cent).

Bill Winters, group chief executive of StanChart, said suppliers - especially those in emerging and fast-growing markets - will need help with reducing their emissions.

"MNCs need to incentivise their suppliers to help them kickstart their transition journey, but governments and the financial sector have a role to play too by creating the right infrastructure and offering the necessary funding," he added.

Last month, StanChart, DBS, the Singapore Exchange and Temasek Holdings announced they would jointly launch a global exchange and marketplace for high-quality carbon credits by the end of 2021 to incentivise emissions cuts.