All members of supply chain are charged with the mission of environmental responsibility. The most critical aspects vary by company and operation, but the main idea is that supply chains everywhere must do their part to reduce their environmental impacts.

New insights from ABI Research state that government regulation is the real driver of environmental initiatives, which is of particular interest as international leaders have just met at COP28. Currently, most regulations just require disclosure of climate-related risks associated with the business, as well as some greenhouse gas emissions. The United Kingdom and Japan already require climate disclosures, the United States could start requiring them sometime this year, and the European Union (EU) is set to require disclosures from large companies beginning in fiscal year 2024. Australia, Brazil, Canada, Hong Kong, New Zealand, Singapore and Switzerland all have mandatory climate risk reporting proposed or in process, mostly aligned with the Task Force on Climate-Related Financial Disclosures framework.

But some countries are taking this a step further. According to EU climate law, countries in the EU must cut their greenhouse gas emissions by 55% by 2030, with a goal of being climate neutral by 2050. Moreover, the EU has a Circular Economy Action Plan (CEAP), which aims to make sustainable products mainstream in the EU. The CEAP has announced initiatives that address the lifetime carbon emissions of products — targeting how products are designed — while encouraging sustainable consumption and enacting legislation that optimizes resources, prevents waste, and supports product repair and reuse. The first industry sectors targeted with CEAP are ones that consume meaningful resources and have a high probability of achieving success with circular applications, such as electronics and information technology devices, batteries, vehicles, plastics, packaging, textiles and apparel, construction and building materials, and food and beverages. Of course, after COP28, the hope is that international leaders will make even more meaningful progress.

Prepare your plan
Supply chains must have a year-by-year, comprehensive framework to get to net zero. ABI Research recommends that these plans focus on the following areas:

• Assess the regulatory environment for mandatory climate disclosures and establish an environmental, social and governance (ESG) and climate risk leadership structure. Invest in digital technologies to help automate the measurement and management of scope 1, 2 and 3 carbon emissions. Use high-quality carbon offsets for any remaining emissions.
• Use electricity from renewable sources.
• Optimize product design software with data integration and sustainability capabilities. Remember, 80% of a product’s environmental impact is established in the design phase.
• Invest in Industry 5.0 technologies for factory efficiency.
• Use greener chemistries for manufacturing processes that employ or emit high-global-warming-potential greenhouse gases while turning raw materials into goods.
• Reduce freshwater consumption through innovative solutions to address water security.
• Optimize digital platforms that contribute to a circular economy to increase product durability, repairability, recyclability and reusability.
• Invest in technologies that promote healthy and energy-efficient business sites. Transition the company fleet to electric vehicles and use telematics to reduce fleet carbon emissions.
• Maximize supply chain influence to reduce scope 3 and value chain emissions with ambitious supply chain programs. Use centralized technology platforms to aggregate information. Request that vendors and suppliers meet ESG standards while reducing their own carbon emissions.

Supply chain organizations must push forward their environmental efforts and take a long-view focus on sustainability that improves brand reputation and their power to attract both investors and talent. This translates to increased revenues and market value. But the real payout is, of course, saving the earth by supporting cleaner air, cleaner water, lower carbon emissions and a livable environment.

Are you ready to reduce your organization’s environmental impacts? Access ASCM’s industry-wide benchmarks, including the SCOR Digital Standard, the Digital Capabilities Model and more pacesetting sustainability resources.