SUPPLY CHAIN MANAGEMENT
Figure 2 – Levers for emission reductions
their sustainability knowledge and use it to improve their processes . Energy efficiency is another known driver of global emissions reductions . For example , some studies estimate that the chemical sector has the potential to realise 18 % energy efficiency gains by 2035 . It is easy to encourage suppliers and value chain partners to act , and this can be the basis for rewarding suppliers .
Lever 5 : Renewable energy transition at suppliers
The increasing availability of renewable energy enables companies to demand that their suppliers transition to renewable power . To accelerate decarbonisation , they must prioritise strategic supplier sites with the greatest potential for seamless renewable energy transitions . Supplier site targetting is influenced by a plethora of variables , including availability , local policy and market , and type of supplier activity . These factors are most relevant to high energy users like manufacturing and processing sites . Companies can support implementation by promoting transparency around their renewable energy commitments , setting examples of feasible goals , engaging in buyer alliances like REBA and advocating for policy change . The goal is to bolster supplier capacity to identify
and drive impactful transitions . Buying companies can guide action through direct financing or by coordinating local financing from the government . For example , Evonik is helping its suppliers to reduce production emissions by using renewable energy and process improvements . DSM has a dedicated supplier engagement programme called CO 2
Reduce , which is aimed at reducing upstream emissions in the value chain . The programme invites key suppliers to work towards sourcing renewable energy and other emission reduction actions . Moving to renewable energy is a known opportunity to reduce emissions , but the regulatory landscape and availability , plus capital expenditure , can be impediments . By making a concerted effort to understand renewable energy options across its supply chain , a company can help its suppliers overcome lingering barriers .
Lever 6 : Supplier SBTs
Companies may encourage or require suppliers , usually a sub-set of strategic or critical suppliers , to set SBTs . Target-setting is crucial to reducing emissions in line with the scale of reductions required to keep global warming well below 2 ° C from pre-industrial levels . There is significant momentum , with many new companies now committing to SBTs , but the targets themselves do not reduce emissions . Companies should help suppliers to construct actionable roadmaps to achieve their goals . Engie has committed that all its preferred suppliers will have SBTs in place by 2030 , a commitment it shares across the supply chain . The company facilitates workshops with preferred suppliers to foster awareness around SBT setting and carbon accounting and supports the development of supplier-led sustainability strategies . By cascading SBT commitments , companies can drive consistency and accelerate progress . Given the complexity of setting and achieving SBTs , the value capture of this project is most significant for larger businesses . Ambitious , measurable reduction targets can drive the necessary transformation to supplier operations as well as unlocking substantial growth through transformative shifts to business models , products and services .
Conclusion
These six ways to reduce supply chain emissions can be applied at scale today . A good starting point is to step back , understand where the most significant opportunities are , and ensure alignment with business strategy . Any approach should be used wisely across the supply chain as part of a coherent decarbonisation strategy , and the whole should be greater than the sum of its parts . So , what are you waiting for ? We have a decade . Let ’ s get to work . •
Inès Prudent
CORPORATE COMMUNICATIONS MANAGER
ENGIE IMPACT k + 33 6 65 78 28 85 J ines . prudent @ engie . com j www . engieimpact . com / contact
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