How can companies decarbonize their supply chains?

decarbonize supply chain
decarbonize supply chain

Decarbonizing supply chains involves reducing greenhouse gas (GHG) emissions across the entire value chain of a company. This includes emissions from suppliers, transportation, distribution, product use, and end-of-life treatment (Scope 3 emissions). Decarbonizing supply chains is critical for companies to meet their sustainability goals and climate commitments.

Companies can take several steps to decarbonize their supply chains:

Understand emissions sources

The first step is to understand the sources of emissions in the supply chain. This involves working with suppliers to collect emissions data, conducting a screening to identify the largest sources of emissions, and establishing a emissions baseline. Key emissions sources to analyze include:

  • Raw materials production
  • Manufacturing processes
  • Transportation and distribution
  • Use of sold products
  • End-of-life treatment of sold products

Set emissions reduction targets

Once the emissions baseline is established, companies should set science-based emissions reduction targets. These targets should cover a significant portion of total scope 3 emissions (at least 67%). Both long-term and interim targets can be set. For example, Walmart aims to reduce supply chain emissions by 1 billion metric tons by 2030.

Engage suppliers

Collaborating with suppliers is critical to reducing scope 3 emissions. Companies can provide suppliers with training, resources, and incentives to take action. For example, providing data collection templates and holding workshops on emissions reduction opportunities. Setting joint goals and providing recognition for achievements can further motivate suppliers.

Support implementation

Companies can support suppliers in implementing emissions reductions by providing funding, sharing best practices, facilitating access to low-carbon technologies, and building capacity. For example, working together to increase renewable energy procurement.

Track progress

Robust monitoring and reporting processes should be established to track emissions reductions progress across the supply chain. This allows for validating achievements and identifying areas for further improvement. Suppliers’ sustainability performance can be incorporated into supplier scorecards.

Advocate for change

Beyond individual company initiatives, advocating for broader policy changes can support economy-wide supply chain decarbonization. Companies can join initiatives like the Renewable Energy Buyers Alliance to call for increased renewable energy access. Decarbonizing supply chains requires extensive cross-industry collaboration. However, it presents a major opportunity to drive large emissions reductions and build climate resilience.

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