We need greater collaboration on carbon reduction
A source of supply chain risk that threatens to play a significant role in the near future is a supplier's commitment to reducing carbon emissions.Only last month Wal-Mart, the world's largest retailer, announced that it would cut 20 million metric tons of greenhouse gas emissions from its supply chain by the end of 2015 - the equivalent of removing more than 3.8 million cars from the road for a year.
To achieve such goals buyers across all sectors are starting to be tasked with finding suppliers that fall in line with their company's policy on carbon reduction and are looking for suppliers that are active in monitoring and reducing their carbon footprints.
This growing focus on the supply chain as a means to hitting carbon reduction targets is hardly surprising.
According to the McKinsey Global Institute Report 2008, 'for consumer goods makers, high-tech players, and other manufacturers, between 40 and 60 per cent of a company's carbon footprint resides upstream in its supply chain. For retailers, the figure can be 80 per cent. Therefore, any significant carbon-abatement activities will require collaboration with supply chain partners.'
Legislation is already pushing many organisations to think about their carbon usage. On the 1st April, five thousand companies in the UK will be affected by new legislation requiring all companies on half-hourly electric meters to register for the CRC Energy Efficiency Scheme, committing them to submit an information statement on their carbon usage.
Soon, the risk of carbon complacency may be one of the most significant for suppliers as buyers pursue a policy of reducing the carbon footprint of their supply chains.
However, suppliers, and buyers alike, are perplexed by the range of emerging standards, measurement techniques, reporting tools and management methods available and suppliers are challenged by the complexity of presenting varying data to many organisations.
Clearly, establishing an environment in which practical progress can be made requires a collaborative approach by an industry on a collective basis so that the challenges of interpretation and implementation can be clearly understood and used to develop best practice methodologies that may be shared throughout the community - research has already demonstrated the inaccuracy of 'carbon calculators' for instance. After all, it makes little sense for suppliers to work independently, each measuring in their own way and coming out with very different figures.
By working together they can ensure that buyers are offered a true comparison and, what is more, the cost burden can be shared. But importantly, this process needs to be properly audited and suppliers certified to a common standard.
The utilities sector is leading the way in adopting a collaborative approach to this problem, working through the internationally recognised Certified Emissions Measurement and Reduction Scheme (CEMARS). It might be worth other sectors looking at collaborating in this way too.
Lucy d'Arville is Director of Carbon Reduction Services at Achilles
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