Large and small companies can ask their suppliers to take more action on climate change
By Carlos Roa
Earlier this week, the world’s largest online retailer, Amazon, disclosed that they will ask its supply chain to report emissions starting in 2024. They want to know more about their providers’ decarbonization goals and progress.
As you read this article, from many of the largest firms to an increasing number of small merchants continue to join the list of those asking their suppliers for information on this key issue for their respective businesses.
The strategy consulting firm McKinsey states that governments, regulators, investors, and customers are increasingly demanding that business play their full part in global efforts to tackle climate change. It also affirms that “Companies are responding with a wave of public commitments to ongoing emissions reductions.”
But they warn that it might not be that easy. “Setting ambitious targets is one thing. Fulfilling them is another.” And there could be some obstacles along the way.
One thing is to commit, and quite another is to find ways to measure, track and implement it.
Such commitments as the aforementioned, for example, involve monitoring data on the deforestation impact of ingredients such as soy, palm, cocoa, and coffee, which many consumer goods companies and retailers use in their food and personal care products.
All this sounds like a daunting challenge, and actually it is not an easy one at all.
But the road is being traveled by many and this brings learnings that will help the list grow larger and larger.
Now, how can we navigate this path?
According to the World Economic Forum, this is a six-step guide to decarbonize a supply chain:
- Connect suppliers to CDP, the international non-profit organization for environmental impact assessment.
- Make use of this data when selecting preferred suppliers.
- Actively support suppliers in developing their capabilities.
- Take a look for yourself. Organizations and their suppliers are essentially operating in the same industry, so it’s often relatively easy to identify opportunities for decarbonization during an on-site assessment.
- Incentivize suppliers. At the very least, give suppliers recognition for their carbon reductions to support their brand. Going further, offer better payment terms to suppliers taking concrete climate action.
- Advocate for climate action. Do everything to make decarbonization ‘the new normal’, not just across your industry or sector, but across the entire industry, alongside a network of partners.
The knowledge-based standardization of this process makes decarbonization of the supply chain a task that numerous companies of all sizes around the world are currently working on.
