SC Group "Global Carbon Reduction Causes $142.5 Billion Export Loss for Korean Suppliers"

Standard Chartered Group Releases Carbon Neutral Transition Report
Survey of 400 Experts in Corporate Sustainability and Supply Chains
78% of Global Corporations Say "Trade Will Cease if Carbon Transition Is Insufficient"
35% of Suppliers May Lose Business During Carbon Reduction Process

[Asia Economy Reporter Song Seung-seop] A survey found that 78% of global conglomerates will begin cutting ties with suppliers that are insufficient in transitioning to carbon neutrality by 2025. While 35% of suppliers are expected to lose business with global conglomerates during the carbon reduction process, the potential export loss for Korean suppliers is also projected to reach $142.5 billion by 2030.

Standard Chartered Group released the 'Carbon Dated' report on the 7th, assessing the impact of carbon neutrality transition on suppliers of global conglomerates. The report includes survey responses from 400 sustainability management and supply chain experts from global conglomerates worldwide. It also contains an analysis of risks and opportunities facing suppliers in emerging and high-growth markets due to the carbon neutrality commitments of global conglomerates.

According to the report, as global conglomerates accelerate their carbon neutrality goals, they are gradually increasing pressure on suppliers to adopt sustainable management practices. The report highlights that suppliers in emerging and high-growth markets are facing significant challenges as a result.

The report analyzed that 15% of global conglomerates had already started cutting ties with suppliers that could hinder their carbon neutrality transition plans last year. It is estimated that 62% of global conglomerates will begin cutting ties with non-compliant suppliers in 2024, rising to 78% in 2025.

Currently, suppliers' carbon emissions account for an average of 63% of the total carbon emissions of global conglomerates, leading 67% of these conglomerates to view resolving suppliers' carbon emission issues as the first step in their carbon neutrality transition. Consequently, 57% of global conglomerates expressed willingness to replace suppliers in emerging markets with those from advanced markets to achieve carbon neutrality.

Emerging Market Suppliers Lack Carbon Neutrality Knowledge... "Government and Financial Sector Must Also Support"

Additionally, during the carbon emission reduction planning process, it is expected that 35% of current suppliers will be cut off. Notably, 89% of global conglomerates dealing with Korean suppliers have set a reduction target to cut carbon emissions by an average of 30% across their global suppliers by 2025.

The report forecasts that the export loss for Korean suppliers failing to meet global conglomerates' reduction targets will reach $142.5 billion by 2030. Conversely, suppliers in 12 major emerging and high-growth markets that achieve the carbon neutrality plans of global conglomerates are expected to gain new export opportunities worth $1.6 trillion annually.

Global conglomerates' consideration of cutting ties with suppliers stems from the judgment that emerging market suppliers lack the necessary knowledge and data. Fifty-six percent of global conglomerates view the knowledge deficiency of emerging market suppliers as a significant barrier to carbon neutrality transition.

However, some parties are exploring ways to support suppliers' carbon neutrality transition. This includes granting 'preferred supplier status' to sustainable suppliers or offering 'pricing-related benefits.' Some also provide subsidies or loans to encourage investment in carbon emission reduction or data collection.

Bill Winters, Chairman of SC Group, stated, "It is not surprising that global conglomerates require suppliers to demonstrate their own transition processes during the shift to carbon neutrality," emphasizing, "Since suppliers find it difficult to start carbon neutrality independently, governments and financial sectors must also establish appropriate infrastructure and provide financial support."

This content was produced with the assistance of AI translation services.