The importance of your supply chain

Last updated: 3rd March 2022

You may think net zero is not important or relevant to you, but your clients who are on the path to ‘going green’ may not feel the same way. In fact, they could start putting pressure on your business sooner than you think.

You may think net zero is not important or relevant to you, but your clients who are on the path to ‘going green’ may not feel the same way. In fact, they could start putting pressure on your business sooner than you think.

For a company, optimising your supply chain for net zero can increase efficiency, decrease costs and enhance customer service. It builds your reputation among customers and employees who have rising expectations for sustainable business. It also wins funding support from investors who increasingly demand strong environmental, social and corporate governance.

What is net zero?

Net zero refers to the balance between the volume of greenhouse gas produced and the amount removed from the atmosphere. This balance – net zero – will happen when the carbon added to the atmosphere is no more than the amount removed.

Net zero is the best way to tackle climate change by reducing global warming. Achieving a net zero, or close to net zero, the target is necessary to arrest global warming at 1.5 Celsius. The UK set a target to achieve net zero by 2050, which is looking increasingly over-ambitious unless businesses act immediately.

What are scopes 1, 2 and 3 of carbon emissions?

The Greenhouse Gas Protocol is the world’s most widely used greenhouse gas accounting standard, with three scopes. Scope 1 covers direct emissions and Scopes 2 and 3 are indirect emissions. Achieving carbon neutral status only covers Scopes 1 and 2.

Scope 1

Scope 1 emissions are direct emissions deriving from company-controlled resources. Emissions are a direct result of activities such as heating an office, a manufacturing process, or running vehicles. Scope 1 includes all fuels that produce greenhouse gas emissions.

Scope 2

Scope 2 emissions are the indirect emissions created in the production of the energy used by your business, which could be from renewable or fossil fuel-based sources, or a mixture. Scope 2 emissions can be zero if supplied 100% from renewables.

Scope 3

Scope 3 emissions are generally the largest part of an organisation’s carbon footprint as they cover a much wider remit within a supply chain, where your business does not own or control those activities. These indirect emissions might include transport, distribution, waste, leased assets, business travel, commuting, purchased goods and services through your supply chain, and water consumption.

Calculating scope 3 emissions can be a complex and detailed task, because of the numerous parties and processes involved, and the results may surprise you. It may be suppliers that have a comparatively minimal financial impact on your business are having the biggest impact on carbon footprint.

Addressing Scope 3 emissions is crucial for achieving supply chain decarbonisation.

The supply chain

Larger companies will start (if they have not already) to put pressure on their whole supply chain to move to net zero. This is likely to include a requirement for suppliers to source sustainable energy, be sustainable with water use and find innovative alternatives for raw materials and other inputs.

Your business’s scope 1, 2 and 3 emissions make up part of scope 3 emissions for any business that is upstream within your supply chain. They will want to know what actions you are taking and, if they don’t like what they hear, may consider alternative suppliers. Ignoring net zero will end up costing you customers and that could happen sooner than you think.

From a smaller business perspective, it is easier to deal with your own challenges but more difficult to convince others within your supply chain to follow suit and help you get to net zero, as you cannot put the same pressures on them that a larger business can.

We are running supply chain assessments to determine where to switch to alternative suppliers aligned with our net zero goal, using certified carbon offsets to bring us to being carbon neutral whilst we work through these challenges.

The key is to do your research. Achieving net zero requires coordinated action touching on many parts of an organisation. What may seem overwhelming can be broken down into strategic and controllable steps, starting with analytics, then solutions, and finally implementing change. Achieving net zero requires investment and buy-in from all areas of a business and thought needs to go into finding the right ways to achieve it.

N.B. The information contained in this entry is provided by the above supplier, and does not necessarily reflect the views and opinions of the publisher

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