Trade and Kyoto and Emissions, Oh My! Taking Responsibility for Carbon Emissions in the Supply Chain

February 2, 2011 EcoVadis

A recent publication by the Centre for International Climate and Environmental Research in Oslo, concludes that figures on CO2 emissions based on the Kyoto Protocol do not relay the true distribution of carbon emissions between North and South. They argue that international trade has not been taken into account when reviewing these emissions and that the import of goods to the developed world from developing countries (particularly China) essentially mean that emissions are being off-loaded from the developed world. Under the protocol, emissions released during production of goods are assigned to the country where production takes place, rather than where goods are finally consumed, which means that by importing manufactured goods from developing countries that are not signatories to Kyoto and for economic development reasons have less restrictions on their CO2 emissions, developed countries have been able to mask their contribution to CO2 emissions.
So much so that when revised figures are calculated balancing out these imports, they reveal a very different picture: under the protocol as it stands now, developed countries can claim to have reduced their collective emissions by 2% between 1990 and 2008. But once the carbon cost of imports have been added and exports subtracted, there is an increase of 7%. If Russia and Ukraine are excluded (they cut their CO2 emissions rapidly in the 1990s due to the collapse of the USSR), the increase becomes 12%.
The report writers suggest that “policies that affect international trade should not be continually separated from climate policy” In particular, international trade and investment flows provide a link between production and consumption in different countries that should not be ignored when calculating CO2 emissions. Which is why it is more important than ever to ensure that companies account for the CO2 emissions of their world-wide suppliers if they want to get an accurate picture of their total emissions. With global trade increasing (WTO economists have revised their projection for world trade growth in 2010 upwards to 13.5% in September from 10% expansion in trade volumes predicted in March) it is critical to look at emissions throughout the supply chain in order to accurately gauge progress or highlight failures in meeting Kyoto Protocol’s reduction aims for countries as a whole.

This report demonstrate the critical importance of Sustainable Procurement initiatives, where Companies start to monitor and reduce CO2 emissions associated to their global trade, in particular suppliers in emerging countries. The recent initiatives from Sprint, BT, or Tesco are clear best practices in this respect.

This article was written by Maria Mursell, a CSR Analyst at EcoVadis.

Photo under Creative Commons license courtesy of Jim Bahn.

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