In our journey towards a net zero future, decarbonising supply chains stands as one of the most crucial challenges. The GHG Protocol and World Economic Forum outline that emissions from supply chains (termed “Scope 3 emissions”) can represent up to 90% of companies total emissions, depending on the industry.
Reaching net zero therefore relies on decarbonising not just your own operations, but also entire supply chains. These supply chains may be comprised of a huge range of suppliers – from small family-run businesses to local councils to multi-national companies.
The lack of data and operational control that most companies have on their supply chains, means it is often difficult to take the first step in decarbonising these emissions. Despite these challenges, supply chain decarbonisation is an opportunity to innovate, collaborate, lead, and future-proof in a rapidly evolving business landscape.
In this blog we provide ten actionable strategies to help your organisation make significant strides in supply chain decarbonisation.
If you need help kickstarting or progressing your supply chain decarbonisation activities, reach out to our Carbon Accounting experts for an introductory call by emailing info@cityscience.com.
Figure 1: Industry emissions showing percentages that are scope 1,2 and 3. Source: Boston Consulting Group / WEF
1. Establish Your Supply Chain Emission Baseline
- Why it matters: A baseline provides a starting point for measuring progress and identifying key areas for improvement and is essential to understand where to focus your efforts.
- Actions: As a first step, break your expense data down by supplier and sector and apply relevant spend-based emission factors to each, depending on the sector. More advanced techniques can be applied as you delve deeper into your supply chain emissions. Importantly, an initial baseline will provide you with critical information regarding emission hotspots and key suppliers to focus on.
Pro tip: Don’t let perfect be the enemy of good. Start with the data you have, even if it’s not complete. You can refine and improve over time adding more advanced analysis as you develop your processes and strategies.
2. Foster Collaboration: Host a Supplier Sustainability Workshop
- Why it matters: Supply chain decarbonisation will require collaboration, since any single company is a supplier in a much larger machine. Engagement and partnership are crucial for successful supply chain decarbonisation and to establish and maintain buy in to the necessary changes.
- Actions: Organise an interactive sustainability workshop with an open invite to all your suppliers that includes an overview of the supply chain opportunity, case studies, brainstorming sessions, actionable takeaways for suppliers, and inspiring talks from experts or sustainability managers from companies you work with.
Pro tip: This is a great opportunity to share your current sustainability work, any new policies you are working on that will affect suppliers, and to share projects you are developing that will require supplier involvement.
3. Undertake a Supplier Carbon Maturity Assessment
- Why it matters: Alongside baseline data, understanding your supply chain’s current approaches and maturity to climate and nature risks will help identify the most impactful next steps for your supply chain decarbonisation activities.
- Actions: Conduct a thorough carbon maturity assessment of key suppliers, considering factors such as emission categories recorded, net zero targets, carbon reductions, data quality, action plan comprehensiveness, carbon mitigation, climate policies, etc.
Pro tip: Think about using the results of each maturity assessment to give suppliers actionable takeaways to improve their maturity and meet your requirements.
4. Identify and Prioritise Key Suppliers
- Why it matters: Focusing on key suppliers allows you to maximise the impact of your decarbonisation efforts.
- Actions: Use your baseline emission findings to identify supplier hotspots and quick wins, such as suppliers that you have the greatest potential to collaborate with to reduce their emissions.
5. Build a Business Case for Supply Chain Decarbonisation
- Why it matters: Putting a cost on your supply chain net zero plan, and identifying any cost savings, or the costs of not acting, will be essential to ensuring internal buy-in from finance, procurement, and operations teams to larger initiatives to mobilise decarbonisation.
- Actions: Build on the baselining and supplier assessment data to develop a Net Zero routemap for your supply chain. This will include researching and proposing specific decarbonisation strategies tailored to each high-emission area, costing these up and identifying wider benefits and opportunities that can be monetised. Strengthen the case by identifying opportunities to enhance revenue or success supplier case studies that demonstrate the feasibility and benefits of supply chain initiatives.
Pro tip: Identify holistic benefits to include in this business case, such as what customers are asking for and wider industry pressures such as forthcoming legislation etc.
6. Enhance Data Collection Pipelines
- Why it matters: Accurate and comprehensive supplier data is the foundation of effective decarbonisation efforts and will streamline your emission reporting journey.
- Actions: Invest in robust data collection systems, processes and technologies to ensure reliable tracking of emissions throughout your supply chain. Ensure you engage with suppliers to communicate what you will need to support these processes both now and as they develop in the future.
7. Maintain Regular Communication with Suppliers
- Why it matters: Consistent communication keeps sustainability top-of-mind and encourages ongoing improvement. Likewise, it will give suppliers time to react to and meet your level of sustainability maturity.
- Actions: Create a monthly sustainability newsletter featuring updates, success stories, practical tips for reducing emissions, and incoming legislation. Quarterly or Annual events can also be planned to ensure there are opportunities to showcase successes and have two-way dialogue with suppliers.
8. Develop a Comprehensive Value Chain Sourcing Policy
- Why it matters: Clear guidelines ensure all suppliers understand and adhere to your sustainability standards.
- Actions: Include specific, measurable sustainability criteria in your supplier selection and evaluation processes.
Pro tip: Give suppliers varying degrees of compliance options, which will become more strict as you progress to your net zero target year. For example, requesting them to set net zero targets could allow for just scope 1 and scope 2 initially, but could ramp up to include all scope 3 within 3 years.
9. Actively Seek Low-Carbon Alternatives
- Why it matters: Proactively exploring alternatives can lead to significant emissions reductions and potential cost savings.
- Actions: Establish a dedicated team or process for researching and evaluating low-carbon materials, technologies, and processes. An example could be exploring low carbon or sustainable packaging options if you are a retailer, such as reusable packaging, or investigating solutions to decarbonising last mile delivery through electric delivery services.
10. Collaborate Across Industries
- Why it matters: Decarbonisation is a collective challenge that requires shared knowledge and resources.
- Actions: Join or initiate industry working groups focused on supply chain sustainability to share best practices and drive collective action.
Conclusion: Leading the Charge Towards a Sustainable Future
Implementing these strategies can propel your organisation to the forefront of supply chain decarbonisation. Remember, this journey requires commitment, innovation, and collaboration, but the rewards—both environmental and economic—are substantial. By taking decisive action now, you’re not just reducing your carbon footprint; you’re positioning your company as a leader in the transition to a low-carbon economy. This proactive approach can enhance your brand reputation, improve operational efficiency, and create new opportunities for growth and innovation.