One of the most challenging aspects for large corporations in achieving their science-based emission reduction targets is addressing the emissions of their supply chains. These account for an average of 5.5 times a company's direct emissions.
Hence, the importance of the '1.5°C Supply Chain Leaders' initiative, which Telefónica has been invited to join because of our ambition to tackle the climate emergency. This programme will enable us to strengthen our role in the value chain and accelerate the decarbonisation of the world economy. Here our commitment is to reduce CO2 emissions by 39% in 2025 and to reach "net zero" by 2040 (in 2019 our Scope 3 emissions decreased by 18.5% compared to 2016). To do this, it is essential to work with the supply chain, where 60% of our Scope 3 carbon emissions come from.
Collaboration with other multinationals through '1.5°C Supply Chain Leaders' will allow us to make progress with SMEs, co-creating in support of the Paris Agreement. For them, digitalisation can be an excellent means of reducing their emissions. Telefónica currently has more than 6,000 small and medium-sized suppliers, 61% of our suppliers awarded contracts in 2019.
'1.5°C Supply Chain Leaders' especially seeks to support SMEs through the SME Climate Hub, to help them halve emissions by 2030 and achieve zero net emissions by 2050. '1.5°C Supply Chain Leaders' was founded by the Exponential Roadmap Initiative together with Ericsson, IKEA, Telia, BT Group and Unilever and is supported by the International Chamber of Commerce (ICC) and the We Mean Business Coalition.
Working with SMEs is essential to limiting global warming to 1.5 degrees Celsius
Telefónica's work with its suppliers is not new. It has long built relationships based on a mutual commitment to sustainability. An example of this is the Eco Rating, the environmental seal for devices. It also includes agreements to power Telefonica's networks with 100% renewable energy.
And, in 2018, Telefónica launched a new climate change collaboration programme with key suppliers. Companies were selected for their percentage of emissions, degree of maturity in managing climate change and strategic importance to Telefónica. Suppliers included in this programme account for 68% of the company's supply chain emissions and 39% of its total Scope 3 emissions. Each supplier has defined objectives for managing its carbon footprint, on various issues such as emissions, energy, transport, product, carbon pricing, etc. Collaboration with Telefónica inspires them to take action and innovate.
One of the new measures announced recently is the forthcoming establishment of a carbon price for acquisitions. And no doubt, cooperation with the '1.5°C Supply Chain Leaders' corporations will lead to other interesting initiatives.
These days, Nestlé and Ragn-Sells have also joined the programme so ‘1.5°C Supply Chain Leaders’ represent a combined turnover of 284 Billion Euros.