A Guide to Sustainable Supply Chain Management
As more stakeholders demand for businesses to play their part in tackling climate change, companies are responding with public commitments to reduce emissions. These commitments tend to focus on the Greenhouse Gas (GHG) Protocol’s Scope 1 and Scope 2 emissions, which are produced directly by companies or indirectly through the purchase of energy.
However, most emissions across the supply chain are accounted for under Scope 3, which are emissions generated in the upstream and downstream value chain. This is an important step because for many companies, Scope 3 accounts for 80 percent of their overall climate impact, according to a McKinsey article.
Tackling Scope 3 presents an additional layer of complexity, including opaque carbon-accounting and tracking practices, collaboration with various stakeholders like customers, supply networks, and industry groups, and the difficulty of keeping stakeholders engaged in a complex, multiyear change effort.
A sustainable supply chain does not just take into account its environmental impacts but also the impact they have on the people and communities along their supply chain. This could look like reducing carbon emissions, having fair labour practices and supporting local communities where raw materials are sourced from.
Below, you can find some steps you can take to achieve sustainability within your company’s supply chain:
Firstly, it is important to choose suppliers who are committed to doing their part for the planet. Organisations can use data from suppliers on their emissions and climate commitments to decide which supplier is best for them and the planet. Furthermore, organisations can also look into the working conditions of each supplier to ensure employees are not being exploited.
As suppliers tend to be small businesses, especially if they are further down the value chain, organisations can leverage the expertise of international organisations like the CDP to support suppliers in their climate actions. Another step organisations can take is to incentivise suppliers to adopt sustainable best practices, for example by rewarding them for switching to renewable energy.
Organisations can look to streamline operations along the supply chain in order to reduce wastage and make the process more efficient. For example, transporting raw materials directly to the factory where production takes place instead of relying on a middleman will help to reduce energy used for transportation and make the process faster.
Lastly, organisations can avoid excess waste by using only the necessary amount of materials and designing their products to be reused or upcycled.
All of the above methods can be supported by data to keep track of efforts and measure the effectiveness of the strategies. This data can be used to communicate an organisation’s sustainability efforts to relevant stakeholders.
Achieving sustainable supply chains has various benefits including reduced costs for the business, better branding which leads to greater trust from customers and investors and more motivated employees who find purpose in working for an organisation that cares about the environment.