Achieving net zero single-handedly is impossible for any organisation. Every stage of the supply chain contributes to the overall carbon footprint. Working towards net zero, therefore, requires companies large and small to pool together – to measure their carbon footprints, put in place carbon reduction initiatives, and collaborate to drive net zero into the business infrastructure we all depend on.
We’ve been perfecting this process at Planet Mark over the past decade and have developed five key principles for tackling supply chain emissions.
But first, it’s important to clearly define what Scope 3 is and why it is vital for businesses to manage. The Greenhouse Gas (GHG) Protocol has defined three different scopes. These identify the source of emissions as follows:
Emissions from sources that a company creates directly, for instance from burning fuel in gas boilers and company-owned vehicles.
Emissions a firm creates indirectly, associated with the production of energy it purchases, such as electricity and steam, which are produced outside a company’s direct control.
Emissions not produced by the organisation itself, but by those within its value chain: staff commuting; waste generated by the company’s operation, production and transportation of raw materials; and the use and disposal of products and services by customers. Scope 3 is split into 15 distinct categories. It often represents the greatest proportion of a firm’s carbon footprint – sometimes up to 90% of total emissions.
By measuring Scope 3 emissions, organisations can gain a good understanding of their carbon footprint. This, in turn, enables opportunities for radical decarbonisation as well as enhanced commercial resilience. Supply chain transparency, energy efficiency and cost reduction potential, supply chain engagement and risk mitigation to future-proof your business are all part of the equation.
With the climate clock ticking, reducing Scope 3 emissions has become a top priority for organisations globally, especially those that have committed to net zero. It’s a challenging problem to solve, given the complexity of global supply chain networks. And, as mentioned, with Scope 3 representing such a large part of a company’s carbon footprint, it’s easy to see why this is a tough nut to crack.
Many businesses are now entering an era of cooperation to reduce their Scope 3 carbon emissions by identifying new solutions, enhancing knowledge, sharing best practices, and driving collective action at systemic and industry levels.
A collaborative mindset will allow them to accelerate the progress of existing partnerships and create new ones where gaps need to be filled. Having visibility into your supplier base is crucial for businesses to take proactive measures. Why?
- It allows you to make informed choices about how and where to allocate your resources to deliver maximum impact.
- It empowers your supply chain officers and procurement leaders to implement responsible purchasing practices throughout the organisation, ultimately leading to significant reductions in upstream Scope 3 emissions.
- It uncovers various opportunities for your company to enhance brand value, extending beyond emission reductions to create an efficient, resilient, cost-effective and customer-centric supply chain network.
With the right combination of visibility, actions and collaboration, any business can reach its sustainability goals and accelerate decarbonisation. The five key principles to engage your supply chain are:
1. Define your baseline
Collecting data on current emissions from the supply chain serves as a foundation for measuring progress. It provides a starting point for identifying emission hotspots and setting realistic reduction targets.
Without accurate data, it becomes challenging to track progress and evaluate the effectiveness of emission reduction initiatives.
During this process, supplier trust is a significant factor to consider. Often, suppliers are unsure how their data will be used and may worry about potential penalties or loss of business if their responses are deemed unsatisfactory. It is vital for your team to be open and transparent and communicate that data collection is part of an ongoing process and journey, benefitting both your company and its suppliers.
By understanding their baseline, you can develop strategies to provide support. This approach is crucial for building meaningful and long-term relationships.
2. Map and segment
Supplier mapping allows you to understand and target operators that have the biggest influence on your supply chain impact and identify what they need to do differently. By locating and understanding the various suppliers in the chain, your business can effectively prioritise your engagement efforts and develop specific strategies for emission reductions.
One approach does not fit all. A common challenge is not fully understanding the maturity, knowledge and current activities of your suppliers. By appreciating their capabilities, opportunities and motivations, you will be in a much better position to set realistic and achievable goals.
As regards ‘capability’: do your suppliers have the knowledge, skills and abilities to reduce their carbon emissions? If they don’t, organisations like Planet Mark can provide training, workshops and resources to enhance suppliers’ skills in measuring, managing and reducing their carbon footprint effectively.
By the same token, if they have great ability already, you can learn from their expertise and identify potential areas for collaboration or joint investments in reduction projects.
On the ‘opportunity’ front: the processes that guide our decisions and behaviours are influenced by planning, beliefs, desires and incentives. You may want to consider creating opportunities for your clients and suppliers by implementing sustainable procurement policies, offering incentives for emissions reduction, and integrating environmental considerations into supplier selection criteria.
GLP, a global market leader in logistics real estate, offers complimentary Planet Mark Property Certification to its tenants for two years to drive down carbon emissions and encourage its customers to work more closely with GLP on their journey to net zero. By reducing barriers, aligning incentives and fostering a supportive environment, you can empower your suppliers to embrace sustainable practices.
Lastly, ‘motivation’: this comprises factors which make action and behaviours possible, such as ease, accessibility and availability. It is important to understand your suppliers’ motivations, attitudes, values and perceived benefits to create good engagement strategies.
This may involve highlighting the economic benefits of emissions reduction, showcasing leadership potential or appealing to suppliers’ commitment to CSR.
Implementing anonymised supplier benchmarking, for example, enables them to assess their performance relative to peers or competitors. This process can serve as a source of motivation for suppliers, as they can see where they stand and recognise areas for improvement. Armed with this information, they can approach the leadership team and highlight the importance of enhancing their performance.
3. Collaboration and support
Once you have a clear understanding of the maturity level of your suppliers as well as the interventions that will make the most significant impact, you can develop a well-informed engagement programme to invite them to join you on the journey. It’s important to emphasise this is a shared endeavour. It’s not only about your company’s progress but also about collectively working towards a more resilient future.
By fostering a sense of shared responsibility and building strong partnerships, you can collaborate with your suppliers to achieve sustainability goals.
4. Get the conversation started
Initiating a discussion about climate with suppliers will provide an opportunity to directly communicate expectations. It’s vital you clearly articulate your commitment to reducing Scope 3 emissions.
By setting ambitious targets and publicly sharing your sustainability goals, you can send a strong message to suppliers about the importance of emission reduction. This can be done through sustainability reports, public announcement events, or by updating your supplier code of conduct to include specific emission reduction requirements.
5. Procurement policies
Re-think your procurement policies and procedures and re-write them with sustainability at their core. This way you will ensure the system is robust, helping to integrate CSR at governance level. Include any requirements in the evaluation of new suppliers and renewal of contracts with existing ones.
Your sourcing team has a fundamental role to play in making your supplier strategy effective. For this reason, the team must be trained on your company’s decarbonisation strategy – their buy-in is fundamental.
Resources & communication
Overall, provide tools and resources suppliers with different degrees of maturity on climate issues can leverage to commit and take action towards halving their emissions.
While some suppliers might be on track already to do that, others may not know where to start. Link them to useful public resources and offer ad-hoc support where needed. For example, through Planet Mark, Fora Spaces provided its members with Carbon Clinics – one-on-one meetings with experts to help increase activities for those suppliers with a lower level of maturity in their climate journey.
Regular communication and consistent engagement are key to maintaining momentum and ensuring continuous progress. Your ongoing communication with suppliers should have three key objectives: 1) reminding them about the actions they can take to reduce their environmental impact; 2) raising awareness and educating suppliers as regards your company’s vision and goals; and 3) inspiring action and encouraging behavioural change among suppliers.
Establish processes for communication – regular meetings, webinars or forums dedicated to sustainability. These platforms allow for the exchange of information and the sharing of success stories. They also provide a chance to address any challenges and explore potential solutions together.
Finally, define a clear process to track supplier climate performance at least annually, leveraging both disclosures requested directly from them as well as from publicly reported indicators. This provides insights into how specific efforts with select suppliers contribute to your wider supply chain climate targets.
A comprehensive approach ensures a holistic understanding of suppliers’ overall climate performance. With this information available, you can gauge the next steps and the ongoing dialogue needed, creating further transparency and collaboration.
Launched in 2013, Planet Mark is now an internationally recognised sustainability certification. To find out more about the organisation – one of only ten official partners of the UN-backed Race to Zero campaign supporting businesses on their net zero journeys – visit: planetmark.com