Mar 08 2024

The Role of Technology in Enabling Supply Chain Decarbonisation



The Role of Technology in Enabling Supply Chain Decarbonisation

The urgency of the climate crisis is clear. To keep global warming below 1.5°C and avoid the worst impacts of climate change, we need to rapidly decarbonize every sector of the economy - and fast. And while many companies are making progress on reducing their own operational emissions, the real challenge lies in tackling the complex web of suppliers, logistics providers, and other partners that make up the global supply chain.

Consider this: for most companies, the vast majority of their greenhouse gas emissions - up to 90% or more - come from the supply chain, rather than their own operations. These so-called Scope 3 emissions are notoriously difficult to measure, manage, and reduce, spanning multiple tiers of suppliers and crisscrossing international borders and regulatory regimes.

But as daunting as the challenge may seem, there is reason for hope. A new wave of technologies and innovations is emerging that has the potential to accelerate supply chain decarbonisation and unlock new opportunities for sustainable, resilient, and circular business models.

Here are a few of the key technologies that are driving this transformation:

Carbon accounting and management software
The first step in decarbonizing the supply chain is to measure and track carbon emissions across the entire value chain. But for many companies, this is easier said than done. Scope 3 emissions data is often incomplete, inconsistent, and difficult to access, requiring complex calculations and estimations based on industry averages and assumptions.
That's where carbon accounting and management software comes in. Platforms like Persefoni, Watershed, and CarbonChain are helping companies automate and streamline the process of collecting, calculating, and reporting their supply chain emissions data. Using a combination of supplier surveys, spend analysis, and lifecycle assessment methodologies, these tools can help companies gain a more accurate and comprehensive picture of their Scope 3 footprint, identify hotspots and reduction opportunities, and track progress over time.

But carbon accounting is just the beginning. The real value of these tools lies in their ability to enable more proactive and strategic carbon management across the supply chain. By integrating emissions data with other business systems and processes - such as procurement, product design, and logistics - companies can embed carbon considerations into decision-making at every level of the organization. And by setting science-based targets and tracking performance against them, they can drive continuous improvement and accountability for results.

Artificial intelligence and machine learning
Another key technology that is transforming supply chain sustainability is artificial intelligence (AI) and machine learning. By leveraging the vast amounts of data generated by supply chain operations - from sensor readings and shipment tracking to supplier performance metrics and customer feedback - AI algorithms can help companies optimize their networks for efficiency, resilience, and carbon reduction.
For example, AI-powered demand forecasting and inventory management tools can help companies reduce overproduction and waste, while ensuring the right products are in the right place at the right time. Predictive maintenance and anomaly detection algorithms can help identify and prevent equipment failures and process inefficiencies that can lead to excess emissions. And AI-powered logistics optimization can help companies identify the most efficient and low-carbon transportation routes and modes, taking into account factors like fuel efficiency, load capacity, and real-time traffic conditions.

But AI is not just about optimization - it's also about innovation. By analyzing vast amounts of data on consumer preferences, market trends, and environmental impacts, AI can help companies identify new opportunities for sustainable product design and business model innovation. For example, by using machine learning to analyze product lifecycle data, companies can identify opportunities to reduce waste, improve recyclability, and extend product lifetimes - all while meeting evolving customer needs and expectations.

Blockchain and supply chain traceability
A third technology that is gaining traction in the world of supply chain sustainability is blockchain. By creating a secure, decentralized, and immutable record of transactions and information flows across the supply chain, blockchain has the potential to revolutionize traceability, transparency, and accountability.
In the context of decarbonisation, blockchain can help companies track and verify the carbon footprint of products and materials as they move through the supply chain, from raw material extraction to final disposal. By combining blockchain with other technologies like IoT sensors and carbon accounting methodologies, companies can create a "digital twin" of their supply chain that provides real-time visibility into emissions hotspots and reduction opportunities.

Blockchain can also help enable new models of sustainable financing and incentives across the supply chain. For example, by tokenizing carbon credits and other sustainability assets on a blockchain platform, companies can create new markets for environmental goods and services, and reward suppliers and partners for their contributions to emissions reduction. And by using smart contracts to automate and enforce sustainability standards and certifications, companies can drive greater accountability and trust across the value chain.

Internet of Things and real-time monitoring
Finally, the Internet of Things (IoT) is emerging as a key enabler of supply chain decarbonisation, by providing real-time visibility and control over the flow of goods, energy, and resources across the network.
By deploying sensors and connected devices across the supply chain - from factories and warehouses to trucks and ships - companies can monitor and optimize key sustainability metrics like energy consumption, resource efficiency, and waste generation in real-time. For example, by using IoT sensors to monitor the temperature and humidity of perishable goods in transit, companies can reduce spoilage and food waste, while also optimizing logistics for efficiency and emissions reduction.

IoT can also help companies engage suppliers and partners in sustainability efforts, by providing them with real-time data and feedback on their performance. By sharing data on energy use, material consumption, and other sustainability metrics across the supply chain, companies can foster greater collaboration and innovation around shared goals and challenges.

Of course, these are just a few examples of the many technologies and innovations that are driving supply chain decarbonisation. From 3D printing and circular economy platforms to renewable energy and sustainable transportation solutions, the landscape is rapidly evolving and expanding.

But technology alone is not enough. To truly transform the supply chain for a net-zero future, we need a fundamental shift in mindset and behavior - one that prioritizes sustainability, resilience, and circularity over short-term profits and efficiency. We need to rethink how we design products and packaging, how we source materials and labor, how we collaborate with suppliers and customers, and how we measure and incentivize performance.

This will require leadership, innovation, and collaboration at every level of the organization and across the value chain. It will require investing in new skills, capabilities, and partnerships, and embracing a culture of experimentation and continuous improvement. And it will require a willingness to challenge the status quo and reimagine what's possible.

But the rewards of this transformation are immense. By decarbonizing the supply chain, companies can not only reduce their environmental footprint and mitigate climate risks, but also drive innovation, resilience, and long-term value creation. They can build stronger, more trusted relationships with suppliers, customers, and other stakeholders, and create new sources of competitive advantage in the low-carbon economy.

As a sustainability and supply chain professional, I am excited by the potential of technology to accelerate this transformation. But I also know that technology is just one piece of the puzzle. Ultimately, the success of supply chain decarbonisation will depend on the creativity, collaboration, and commitment of people - from the boardroom to the factory floor, from the farm to the store shelf.

So let us embrace the challenge and the opportunity of this moment. Let us harness the power of technology to drive transparency, optimization, and innovation across the supply chain. But let us also recognize that the true transformation starts with us - with our values, our choices, and our actions.

The road to a net-zero supply chain is long and complex, but the destination is clear. By working together and leveraging the best of technology and human ingenuity, we can build a more sustainable, resilient, and prosperous world for all. Let's get started.

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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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