Supply chain emissions offer huge potential for reducing a company's carbon footprint. To tap into this, companies need to work closely with their suppliers to encourage them to switch to renewable energy, says Professor Dr Christian Heinrich from carbmee
The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy
Finding synergies across industry, production and renewable energy is key to 2050 net-zero reduction targets
Global warming has been a constant topic of discussion since the turn of the century. However, since the Paris Climate Agreement in 2015, the severity of the matter has become clear, as has the need for action from all major greenhouse gas contributors. In response, many companies have already or are just beginning to intensify their efforts to address the climate crisis.
Most major enterprises now have comprehensive sustainability strategies and are also beginning to set specific carbon reduction targets to contribute to the global goal of net-zero by or before 2050. To get more carbon under management, most companies break down their emissions into three scopes, according to the GHG Protocol.
When it comes to corporate carbon footprint, it is important that emissions across all three scopes are reduced. Scope 3 accounts for the most significant share of those emissions by far, in some cases as much as 85-95% of a company’s total. For many, Scope 3—and specifically the carbon footprint of the supply chain—holds the key to getting started with meaningful and attainable emissions reductions.
SUSTAINABLE SUPPLY CHAIN
The supplier carbon footprint (SCF) can become a rabbit hole of complex reduction opportunities, but in the short-term it is a great starting point where companies can identify “low hanging fruit”. Once a company is able to measure SCF contribution to its overall CO2 emissions, it can see which of its suppliers are major contributors to its total emissions.
At first, one might think this could create tension in the working relations between companies and suppliers—but that is far from the truth. Often, companies value the relationships that have developed with their suppliers and beyond that, changes in supply are not always simple to implement.
Instead, this opens the door for companies to begin working with their highest-emitting suppliers to reduce their footprint. This is where this “low hanging fruit” comes into play.
ENERGY AND PRODUCTION
If we are going to curb the trend on global warming, businesses should and must work together with suppliers to decarbonise their production. Not only is this the right choice for the climate, but as this topic grows heavier on the public consciousness, it becomes a competitive advantage for both parties.
One of the most immediate ways suppliers can impact their carbon footprint is by switching their production energy supply to renewable energy sources. If companies already have a handle on their carbon management internally, one of the most effective ways they can support suppliers in this switch is by setting targets.
For instance, if a company sees that a supplier is one of its highest emitters, they can set clear reduction targets for suppliers so they know the exact range of reduction they need to achieve and by when, in order to maintain future working relationships.
This means rather than receiving a vague and possibly confusing ultimatum from a company, suppliers can instead enter a dialogue about decarbonisation and develop a plan to meet targets. This energy transition will not happen overnight, but if given the necessary targets, suppliers can take the first steps to planning their energy switch.
When looking at the overall decarbonisation of value chains, the link to the transformation of the energy sector as moving in a more sustainable direction becomes clear.
We should push to expand our thinking on how this shift can be used to benefit not only residential and commercial users, but industries as a whole for more environmentally sustainable production.
The more that the sector continues to expand renewable energy sources, the more affordable those energy options become, acting as a sustainable driver throughout other sectors. •
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