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ASCM Insights

A Net-Zero Challenge for Supply Chains

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The importance of ecological stewardship, social responsibility and economic sustainability continues to intensify for businesses everywhere. According to a new report by the World Economic Forum and Boston Consulting Group, all companies have an opportunity to make an impact by decarbonizing their global supply chains.

The report includes three major findings:

1. For companies in customer-facing sectors, end-to-end emissions are much higher than the direct emissions in their own operations. There are three emissions scopes to be aware of:

  • Scope 1: emissions from operations under a facility’s control, including onsite fuel combustion
  • Scope 2: emissions from the use of electricity, steam, heat and cooling purchased from third parties
  • Scope 3: upstream and downstream value chain emissions.

Therefore, by engaging their suppliers, companies can bring about meaningful emission reductions and accelerate positive climate action.

2. Interestingly, eight supply chains account for more than 50% of global greenhouse gas emissions: food, construction, fashion, fast-moving consumer goods, electronics, automotive, professional services and freight. And a significant share is indirectly controlled by only a few companies.

3. About 40% of all emissions in supply chains could be decreased using readily available and affordable methods, such as circularity and renewable power. Furthermore, achieving net-zero supply chains would only raise end-consumer costs between 1% and 4% at most. “Economics are not a meaningful barrier to moving to net-zero supply-chain emissions,” the report states.

Still, the authors admit that decarbonizing supply chains is not going to be easy. It will involve modifying product design, a different approach to supplier relationships and more.

“Even leading companies struggle to get the data they need and to set clear targets and standards to which their suppliers must adhere,” they write. “Engaging an often-fragmented supplier landscape is challenging — especially when emissions are ‘buried’ deep in the supply chain or when addressing them might require collective action at the industry level.”

To overcome these challenges, the authors offer a clear, step-by-step guide that businesses can follow. The list is a result of interviews with executives from several dozen global companies that are leading the way in supply chain emissions reduction. Following are some of the key actions cited:

  • Set ambitious and holistic reduction targets. Publicly report on your progress.
  • Build a comprehensive emissions baseline and gradually fill it with supplier data. Share this data with suppliers.
  • Revisit value chain, sourcing and product design choices with sustainability in mind. Integrate emissions metrics into the procurement process.
  • Introduce low-carbon governance to align internal incentives and empower your organization to achieve a net-zero supply chain.

The World Economic Forum and Boston Consulting Group also advise employing best practices through certification. Here at ASCM, we have long known the power of certification to transform corporations through educational tools, frameworks and resources that establish organizational best practices, optimize teams and heighten performance.

Taking that a step further, multi-stakeholder collaboration is essential to raising standards, educating users and achieving circular business models. According to a whitepaper by the Economist Intelligence Unit (EIU) and commissioned by ASCM, supply chains must collaborate beyond one’s own network in order to become truly sustainable.

The whitepaper, “Supply chain resilience for an era of turbulence,” is based on a series of in-depth interviews with subject matter experts on supply chain sustainability and resilience. The second phase of this collaboration with the EIU is a benchmarking framework that identifies best practices in both real-time and strategic supply chain resilience.

Access the whitepaper today, and take your first step toward a more sustainable and resilient supply chain. This is a unique opportunity to make an impact on a global scale.

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer at ASCM, the largest nonprofit association for supply chain and the global leader in supply chain organizational transformation and innovation. Prior to this, he was the managing director for the Operations Consulting Group of American Express Tax and Business Services. His leadership roles have included project management, business process redesign, and individual and organizational alignment. Eshkenazi may be contacted through editorial@ascm.org.

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