Achieving Net Zero: effective supply chain engagement and collaboration
For many organisations around 60-90% of their carbon footprint comes from their supply chain. In order to significantly improve the sustainability of supply chains, businesses must work collaboratively to understand the environmental impact of procurement decisions, and collectively reduce emissions.
To do what is needed, businesses need improved access to more reliable data, as well as much greater collaboration with suppliers throughout the supply chain ecosystem. There are four critical steps to achieving both of these objectives.
We recently conducted a supplier survey which found that people were more willing to share data when they believe it will benefit society, when they understand how the data will be used, and when the data-sharing processes are easy. Incorporating these principles into supply chain engagement initiatives can lead to better results in reducing Scope 3 emissions and achieving Net Zero goals. These shared values create both economic value but also value for society, for example:
Taking a human-centred design approach to supply chain sustainability will help organisations understand both the barriers and drivers for data sharing. This understanding will allow businesses to create initiatives that benefit everyone and ensure data-sharing processes are effective in mitigating our collective environmental impact.
Despite increasing regulatory pressure, lack of accurate and complete data impacts large organisations subject to regulations such as Streamlined Energy and Carbon Reporting (SECR), with SMEs facing less regulatory burden. Add to this the fact that only 53% of UK SMEs had sustainability plans in place, according to a 2021 poll – and that most businesses’ supply chains will include SMEs, the need for a supply chain sustainability approach that delivers shared value is critical.
In order to benefit from innovation, efficiency, cost savings and enhanced brand reputation, it is important for all parties involved in procurement and supply to collaborate closely on environmental matters. Sharing insights and best practice is one way in which sustainability experts on the procurement side could educate and support non-experts on the supply side.
Engagement should focus on creating a mutual understanding of sustainability risks and impacts. Buyers can provide value by sharing sustainability expertise and offering training or consulting to suppliers.
Engagement at all levels, rather than just at the board level, is important for success. Everyone can have an impact and should be empowered to believe that they can provide positive results. Raising awareness can also help suppliers identify missed opportunities for improving sustainability, such as the ability to use the data the customer wants, to engage employees and incorporate it into marketing and sales material.
Transparency in communication is a cornerstone of building trust, enhancing reputation and ensuring accountability. Achieving this requires collaborative efforts among all stakeholders to develop data-driven strategic plans which incorporates the objectives and priorities of the different suppliers. Regular communication to stakeholders is key to ensuring accountability as well as managing performance against the roadmap.
To build trust, businesses need to be transparent about how they collect and use data. This transparency is especially important when working with suppliers who might be reluctant to share data if there are concerns about the potential negative impact on their selection. For businesses with limited knowledge in this area may need help to provide accurate data and insights.
The key lies in establishing clear channels of communication, sharing best practices and collaboration can lead to continuous improvements in emission outputs, both for suppliers and buyers.
The collation of supply chain sustainability data is a complex task, with only 38% of businesses calculating their supply chain footprint, and a substantial portion of these relying on overly manual data collection processes.
There are no universal standards for sustainability accounting, causing suppliers to complete numerous different disclosures. By understanding suppliers’ needs and using automation technologies, businesses can improve data collection processes. And as the technologies improve there is opportunity to make processes even more efficient.
Reporting tools like dashboard systems can provide valuable insights and track progress towards sustainability goals, providing a future of industry-led benchmarking, which businesses can work towards as they mature in the process.
Designing a sustainable supply chain programme that incorporates these four considerations will help businesses improve access to better quality data, enabling them to take more informed action on sustainability towards their Net Zero goals.
Collecting and using data will help organisations defend against greenwashing claims, support the development of sustainability and business opportunities, improve supplier relationships and provide valuable insights for all parties involved.
Originally posted here
