Around this time last year, SCM Now Impact discussed the many ways in which the lockdowns of COVID-19 led to plummeting pollution levels. In fact, subsequent research has shown that we were experiencing the largest drop in fossil fuel emissions since WWII. In the article, I wrote that it was encouraging to see many supply chain leaders viewing the road to recovery as a valuable opportunity to prioritize ethical and sustainable business practices. But even then, it was clear that the encouraging short-term gains were no guarantee: “There is still a serious risk that the outbreak itself and the desire for rapid economic recovery will back-burner environmental concerns.”
According to the Global Carbon Project, an international consortium of climate researchers, 2020 industrial carbon-dioxide emissions equaled 34bn tonnes — 7% lower than 2019. Strikingly, Lead Researcher Corinne Le Quéré of the University of East Anglia notes that the global community will have to regularly get emissions down to pandemic levels if we are ever to meet Paris Agreement goals. There needs to be a similar reduction in every two years, but by completely different methods, she explains.
After being put in the spotlight for the past year, supply chains are experiencing significantly more scrutiny from regulators and the public alike. “Companies are no longer concerned solely with the emissions generated by their own operations,” Fast Company recently reported. “They’re also thinking about the impact of their entire supply chain: OEMs, utilities, and transportation.”
The article included two real-world examples of companies making strides toward the emissions challenge. First, General Motors has set strict emission-reduction standards for suppliers, with the goal of 100% participation by 2023, and is helping suppliers locate renewable energy sources to make their operations greener. In addition, the company has become a major buyer of Power Purchasing Agreements — the largest in the automotive industry.
As a supplier, Sonoco Products Company has developed a system for tracking its emissions in order to be fully transparent with customers. A company spokesperson said Sonoco is “encouraged by our customers to set ambitious sustainability targets, to incorporate renewable energy into our portfolio, and to collaborate on specific projects across the value chain that can mutually decrease our carbon footprint.”
Real-world insights
The key takeaway from the initiatives of General Motors and Sonoco Products Company is that cutting emissions demands a collaborative strategy; we will never succeed if individual companies take a piecemeal approach. Furthermore, the executive report Ready for Anything? Turbulence and the resilience imperative notes that benchmarked companies rank supply chain sustainability as a top way to build resilience over the next three-to-five years — yet there’s a gap between rhetoric and reality. Less than half of surveyed companies have set targets to reduce supply-chain-related carbon emissions, even though climate change is among the biggest risk factors of the 21st century.
Developed by The Economist Intelligence Unit and sponsored by ASCM, this report is the result of a series of in-depth interviews with leading supply chain subject matter experts from across the globe. The second phase of this research is a benchmarking framework that enables users to identify and learn about supply chain resilience best practices. I hope you will join us for a free tutorial about the Resilient Supply Chain Benchmark interactive tool on March 24, hosted by Sabu Mathai, senior consultant with The Economist Intelligence Unit Public Policy Practice. You will discover essential supply chain lessons from industry peers and be much better equipped for a resilient future.
