Mar 08 2024

The Importance of Supply Chain Decarbonisation in the Fight Against Climate Change: Why Your Business Can't Afford to Ignore It



The Importance of Supply Chain Decarbonisation in the Fight Against Climate Change: Why Your Business Can't Afford to Ignore It

Climate change is the defining challenge of our time, and the stakes have never been higher. From rising sea levels and extreme weather events to food insecurity and forced migration, the impacts of a warming planet are already being felt around the world, and they're only set to get worse.

To avoid the worst consequences of climate change, we need to rapidly decarbonize the global economy and reach net-zero emissions by 2050. That means transforming the way we produce, consume, and transport goods and services - and it means doing it fast.

But while many businesses are taking steps to reduce their direct operational emissions, there's one piece of the puzzle that often gets overlooked: the supply chain.

In today's globalized economy, supply chains are vast, complex, and often opaque, spanning multiple countries, industries, and modes of transport. And they're a major contributor to climate change. According to the CDP, supply chain emissions are on average 5.5 times higher than a company's direct emissions, accounting for more than 90% of the total carbon footprint for some sectors.

That means that for many businesses, the biggest opportunities for carbon emissions reduction and sustainable impact lie not within their own four walls, but in the network of suppliers, logistics providers, and other partners that make up their supply chain.

But why should your business care about supply chain decarbonisation? Here are three key reasons:

It's a business imperative: As the transition to a low-carbon economy accelerates, companies that fail to address their supply chain emissions risk falling behind. Investors, customers, and regulators are increasingly demanding action on climate change, and businesses that can demonstrate sustainable supply chain practices and green logistics are more likely to win their trust and loyalty.

It drives innovation and efficiency: Decarbonizing your supply chain is not just about reducing emissions - it's also about driving operational excellence and competitive advantage. By optimizing logistics routes, embracing circular economy principles, and leveraging digital technologies, you can reduce costs, improve resilience, and spur sustainable innovation across your value chain.

It's a moral responsibility: Climate change is not just an environmental issue - it's a human rights and social justice issue. The impacts of a warming planet fall disproportionately on the most vulnerable communities, exacerbating poverty, inequality, and conflict. As a business leader, you have a moral responsibility to do your part in mitigating these impacts and building a more sustainable and equitable world.

So what can your business do to decarbonize its supply chain? Here are a few key strategies to consider:

Map your supply chain emissions: The first step is to understand where your emissions are coming from. Conduct a comprehensive carbon footprint analysis of your supply chain, using tools like the Greenhouse Gas Protocol's Scope 3 Standard to measure emissions from purchased goods and services, transportation and distribution, and other relevant categories.

Engage your suppliers: Your suppliers are critical partners in the decarbonization process. Engage them early and often, communicating your sustainability goals and expectations, and providing training and support to help them measure and reduce their own emissions.

Optimize your logistics: Look for opportunities to optimize your logistics network, such as consolidating shipments, using low-carbon modes of transport, and reducing air freight. Collaborate with logistics providers to implement green logistics practices and technologies.

Embrace circular economy principles: Look for opportunities to incorporate circular principles into your supply chain, such as designing products for durability and repairability, using recycled or bio-based materials, and implementing take-back and recycling programs.

Set science-based targets: To ensure that your supply chain decarbonization efforts are aligned with the goals of the Paris Agreement, consider setting science-based targets for your Scope 3 emissions. The Science Based Targets initiative (SBTi) provides guidance and validation for setting supply chain emission reduction targets that are consistent with keeping global warming below 1.5°C.

Decarbonizing your supply chain is not easy, and it won't happen overnight. It requires leadership, collaboration, and a willingness to challenge the status quo. But the benefits - for your business, your stakeholders, and the planet - are immense.

By embracing supply chain decarbonisation as a core part of your sustainability strategy, you can help accelerate the transition to a net-zero future, mitigate climate risks, and create long-term value for all. You can be a leader in the fight against climate change, and inspire others to follow your example.

The time for incremental change is over. The climate crisis demands bold, urgent, and transformative action - and that starts with your supply chain.

So let's roll up our sleeves and get to work. The future of our planet depends on it.

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.

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