Decarbonisation of the Supply Chain
Today, several researchers consider that the dual challenges of COVID-19 and climate change must be addressed together, with zero-carbon solutions ready to accelerate a global recovery towards a healthier and more resilient future.
After the United Nations Conference of the Parties on Climate, the goal of restraining warming worldwide to 1.5 degrees Celsius above industrial levels was still in place; the COP-26 Glasgow Climate Pact set the course for continuing emission reductions. In 2020, there was a temporary drop in emissions resulting from COVID-19, by around 5-10% compared to 2019, the largest since World War II.
But to enter a long-term path to limit warming to 1.5°C, it demands a structural transformation that achieves global emissions reductions of this scale every year, not through crisis, but through a well-managed transition that protects livelihoods and builds a resilient economy, healthy and prosperous without carbon.
Countries and companies are committed to working towards the net-zero carbon target. By the end of COP-26, 137 countries had committed to net-zero emissions, with varying timelines. In addition, a third of the world's 2,000 largest companies fastened together to pursue such net-zero emissions targets.
Decarbonisation of the Supply Chain (SC) will be a game-changer for the impact of corporate climate action; addressing the extent of emissions is critical for companies to meet realistic commitments on climate change.
It allows companies in customer-facing sectors to use their influence in SCs to accelerate and support rapid decarbonisation across the economy and pressure suppliers in regions where governments cannot.
Around 40% of all emissions in these SCs could be reduced with readily available and affordable practices and methodologies and could reduce average costs of between €10 and €12 per ton of CO2, equivalent to a marginal impact on product costs. Zero emissions in the SC and costs to the end consumer would increase by about 1 to 4% in the medium term.
As of December 2021, the Science-Based Goals Initiative shows that more than 1,100 companies have approved and aligned with achieving that goal. Companies such as Walmart, General Mills, Colgate and many others have committed to becoming net-zero by 2050 or earlier and to report their progress in meeting such goals.
While making a public pledge is easy, it is harder to ensure an organisation lives up to its commitment. It is encouraging that more than 1,045 companies representing more than 23 trillion USA dollars market capitalisation have set science-based targets aligned with 1.5°C as part of the campaign to scale the corporate climate response rapidly.
Given that 90% of the world's businesses are small and medium-sized enterprises (SMEs), working with SCs and connecting them with the right tools, such as the recently launched SME Climate Hub8, is vital for implementing ambitious corporate climate action.
It is imperative to call on all organisations and companies to act and join the Zero Carbon Race. Many companies can multiply their climate impact by decarbonising SCs. For companies in most customer-facing sectors, end-to-end emissions are much higher than direct emissions in their operations.
By engaging suppliers to create a net-zero supply SC, companies can increase their climate impact, enable emissions reductions in hardtop sectors, and accelerate climate action in countries where it would not otherwise be high on the agenda.
As the campaign to reduce carbon emissions continues to grow in businesses, Procurement teams are uniquely positioned to help drive business decisions to meet environmental commitments.
After all, Procurement is the first step in sustainability. The Procurement team should develop the skills and knowledge to cooperate with the inside staff to spot chances to redesign products and processes to help meet environmental commitments.
Further comments: innovative organisations are not waiting for new policies to enforce change. In contrast, they make decisions that will positively impact everything from deforestation to water security to reducing carbon emissions.
Is your company committed to driving decisions to meet environmental policies?
Subscribe to our emails & exclusive free content.