How to Measure and Reduce Carbon Emissions in Your Supply Chain: A Step-by-Step Guide for Sustainable Business

If you're a business leader who cares about sustainability, you've probably already taken steps to reduce your company's direct carbon emissions, such as improving energy efficiency, switching to renewable power, or electrifying your fleet. And that's great - but it's just the tip of the iceberg when it comes to your total carbon footprint.

In today's globalized economy, the vast majority of a company's environmental impact lies not in its own operations, but in its supply chain. According to the CDP, supply chain emissions are on average 5.5 times higher than a company's direct emissions, and can account for more than 90% of the total carbon footprint for some industries.

That means that if you're serious about decarbonization and sustainable business, you need to look beyond your own four walls and engage your entire value chain in the effort. You need to measure, manage, and reduce the carbon emissions embedded in the goods and services you buy, the transportation and logistics you rely on, and the waste and disposal you generate.

But where do you start? How do you even begin to quantify the carbon footprint of a complex, multi-tiered supply chain that spans multiple countries and industries? And once you have that data, how do you use it to drive meaningful emissions reduction and sustainable impact?

As a supply chain sustainability expert, I've worked with dozens of companies to help them navigate these challenges and implement effective decarbonization strategies. Here's a step-by-step guide based on best practices and lessons learned:

Step 1: Map your supply chain emissions

The first step in any supply chain decarbonization effort is to understand where your emissions are coming from. That means conducting a comprehensive carbon footprint analysis of your supply chain, using a framework like the Greenhouse Gas Protocol's Scope 3 Standard.

Under the GHG Protocol, Scope 3 emissions are divided into 15 categories, covering everything from purchased goods and services to transportation and distribution to end-of-life treatment of sold products. To map your Scope 3 emissions, you'll need to gather data from suppliers, logistics providers, and other partners on things like:

- Raw material extraction and processing

• Energy use in manufacturing and assembly
• Transportation modes and distances
• Packaging materials and waste
• Product use and disposal
  This can be a daunting task, especially if you have a large and complex supply chain. But there are tools and resources available to help, such as supplier questionnaires, life cycle assessment databases, and carbon accounting software.

Step 2: Engage your suppliers

Once you have a baseline understanding of your supply chain emissions, the next step is to engage your suppliers in the decarbonization effort. Your suppliers are critical partners in reducing carbon emissions, and you'll need their buy-in and collaboration to make meaningful progress.

Start by communicating your sustainability goals and expectations clearly and consistently. Make it clear that reducing carbon emissions is a priority for your business, and that you expect your suppliers to do their part. Consider incorporating sustainability criteria into your supplier selection and evaluation processes, and provide training and support to help suppliers measure and manage their own emissions.

You can also work with suppliers to identify opportunities for emissions reduction and sustainable innovation. For example, you might collaborate on designing more efficient products, using lower-carbon materials, or optimizing transportation routes. By working together, you can unlock new sources of value and competitive advantage while driving down emissions.

Step 3: Optimize your logistics

Transportation and logistics are a major source of carbon emissions for most supply chains. In fact, the global freight transportation sector accounts for around 8% of total greenhouse gas emissions, and is growing rapidly as e-commerce and global trade expand.

To reduce emissions from logistics, look for opportunities to optimize your transportation network and shift to lower-carbon modes of transport. For example, you might:

Consolidate shipments to reduce the number of trips and maximize efficiency
Use rail or sea freight instead of air cargo for long-distance transport
Invest in electric or low-emission vehicles for last-mile delivery
Work with logistics providers to implement green logistics practices, such as route optimization, fuel-efficient driving, and low-carbon warehousing
By focusing on logistics efficiency and sustainability, you can not only reduce emissions but also lower costs, improve service levels, and build resilience in your supply chain.

Step 4: Embrace circular economy principles

Another key strategy for reducing supply chain emissions is to embrace circular economy principles. The circular economy is a model of production and consumption that aims to keep resources in use for as long as possible, minimize waste and pollution, and regenerate natural systems.

To incorporate circular principles into your supply chain, look for opportunities to:

Design products for durability, repairability, and recyclability
Use recycled, renewable, or bio-based materials instead of virgin resources
Implement take-back and recycling programs for end-of-life products
Explore new business models based on leasing, sharing, or servitization
By shifting towards a more circular supply chain, you can reduce emissions associated with raw material extraction, manufacturing, and disposal, while also creating new sources of value and differentiation for your business.

Step 5: Set science-based targets and report progress

Finally, to ensure that your supply chain decarbonization efforts are aligned with the goals of the Paris Agreement and the latest climate science, consider setting science-based targets for your Scope 3 emissions.

The Science Based Targets initiative (SBTi) provides a robust framework for setting emission reduction targets that are consistent with keeping global warming below 1.5°C or 2°C. By committing to science-based targets, you can ensure that your supply chain sustainability efforts are not just incremental, but transformative.

Of course, setting targets is just the beginning. To drive accountability and continuous improvement, you also need to regularly measure and report on your progress. Use frameworks like the CDP Supply Chain program or the GRI Standards to disclose your supply chain emissions, as well as your strategies and actions for reducing them. Be transparent about your challenges and successes, and seek feedback and collaboration from stakeholders.

Decarbonizing your supply chain is a complex and ongoing journey, but it's also one of the most impactful things your business can do to fight climate change and build a more sustainable future. By following these steps and engaging your entire value chain in the effort, you can unlock new sources of innovation, resilience, and competitive advantage, while also making a meaningful contribution to the global climate challenge.

So start measuring, start engaging, and start reducing. The planet - and your bottom line - will thank you.

About Newtral

Newtral AI Platform- Enterprise ESG Platform for Corporates and Supply Chain

We help organizations automate their ESG metric measurements, tracking and reporting across company as well as their supply chain. Our platform solves for all corporate sustainability reporting and carbon accounting needs.

Schedule Exclusive Demo

Learn how Newtral helps sustainability teams. The only tool sustainability teams need to measure, track, and improve ESG metrics, ensuring global compliances within budget.

Book a demo