The supply chain is often cited as one of the areas where companies have significant challenges in managing and reducing emissions. For lots of businesses, most emissions lie within the supply chain, and as such, these emissions are beyond a company’s direct control (Scope 3). This means supply chain emissions are simultaneously the most challenging and the most important.
Earlier this year, EcoAct and SupplyShift participated in a roundtable with several large companies focused on addressing these issues in their own extensive supply chains. The collective aim was to highlight the common challenges and potential solutions for managing emissions reductions in supply chains.
With companies increasingly under pressure to address emissions outside of their direct control, we look at some of the discussion points from the event.
Although the event took place prior to the unfolding of the COVID-19 global pandemic, it is worth mentioning that this crisis has exposed weakness in supply chains. Keeping in mind some of the issues that have been exposed by COVID-19 (the need for transparency, visibility, collaboration, digitization etc.) and applying them to the context of climate change may help better inform how to manage some of the challenges discussed below.
The growing focus and urgency in addressing supply chain emissions is noted by companies and is evident in regulation, investor questions and stakeholder demand.
These multiple stakeholder demands can cause internal company conflicts. For example, issues such as budget and non-alignment with procurement objectives came up as a challenge and a topic for discussion. Specifically, the comments made included:
The companies that participated in the roundtable confirmed that for them, complexity of the supply chain is a key challenge. This is because their supply chains are large and often global by nature. They are also highly diverse and decentralized meaning that there may be both direct and indirect suppliers in the chain. The challenges discussed included:
The landscape for addressing impacts in the supply chain can often be uncertain. What is best practice? How to go about engaging suppliers? How to act on the data and monitor efforts to ensure impact? Companies also face challenges around the Return on Investment. Participants at the roundtable raised:
EcoAct, CDP, and SupplyShift will be running a webinar on Wednesday 6 May to examine some of these points in more depth. Register here.