Sweep for Supply Chain

According to data from the CDP, a company’s value chain emissions are on average 11.4 times greater than those of its own operations. As they form such a significant part of your overall business carbon footprint, it's essential to incorporate them into your carbon management and reporting, and to use them to drive climate action. 

Tackling supply chain emissions can also bring you a range of business benefits. Here are just a few. 

Smarter procurement decisions – Carbon accounting can help you determine which suppliers are committed to taking action on climate change. This enables you to set joint climate goals.

Cost reduction opportunities – It can help you identify carbon hotspots and introduce plans to improve energy efficiency across your value chain.

Your compliance future-proofed – New legislation is already coming into force in some countries which makes it compulsory to report on your supply chain emissions - and this is likely to become more widespread. If you start taking action now, you’ll increase your regulatory resilience.

Improved reputation - Taking climate action across your entire supply chain will show your partners, clients, and stakeholders that you’re truly committed to sustainability, which will boost your competitive advantage. 

Tackling supply chain emissions is about having a strong dialogue and good governance. 

The collective goal should be to make sure your customer-supplier relationships revolve around more than just pricing.

 Why? Because when we add a climate-action dimension to this relationship it benefits both sides.

To find out more about internal and external climate governance, read our white paper.

This is a powerful idea borrowed from the financial sector. Financial organizations are increasingly demonstrating their commitment to climate action. To monitor progress and make more informed decisions, they need transparent and comparable metrics. 

Regulators and organizations like the Task Force on Climate-related Financial Disclosures (TCFD) are exploring the measurement of financial portfolio temperature as a way for investors to better understand their impact on climate change. The temperature method translates the projected emissions of companies within a given portfolio into a rise in average global temperatures. It can be used to indicate, for example, whether a portfolio is likely to keep global warming to 1.5 degrees, as outlined in the Paris Climate Agreement.

In fact, investment performance is likely to soon be reported not just on returns, but also in terms of temperature. 

Why not adopt the same idea for supply chains? 

Your company’s Scope 3 emission reports are likely to be requested by a number of stakeholders, including customers, suppliers, investors, and analysts. Reporting is also essential for complying with industry standards. These depend on your region and scope of operations.

Key legislation includes: 

The Non-Financial Reporting Directive (NFRD) and the Corporate Sustainability Reporting Directive (CSRD) require companies to report their impacts on the environment, energy use, emissions, water use, and air pollution. 

The upcoming EU Sustainability Reporting Standards (ESRS) will apply to large and listed EU companies, and non-EU companies with a turnover in the EU of over €50M. 

In France, the Bilan d’Emissions de Gaz à Effet de Serre (BEGES) which applies to companies with over 250 employees and exceeding 10,000 tons of CO2 emissions per year. 

In Germany, the Supply Chain Act, which requires companies to demonstrate respect for human rights and the environment in their global supply chains.

In the UK, the TCFD-aligned disclosure regulations, which strongly encourage companies to include Scope 3 in their disclosures but don't mandate it, and the Streamlined Energy and Carbon Reporting (SECR) policy, which requires companies with over 250 employees or £36M revenue to report their energy consumption and emissions from Scope 1 and 2.