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Supply Chain and Procurement Professionals need to Engage and Act on Climate Change

SL Staff

Supply chain and procurement can play a big role in mitigating and reversing the effects of global warming. Read how your organisation can help address climate change.

Climate change is a reality. Human influence has contributed to warming temperatures on the planet that are expected to affect every place in the world. Supply chain and procurement professionals can play a big role in mitigating and reversing the effects of global warming.

The recent Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report provides a much-needed reality check and a wake-up call for leaders everywhere. Compiled by 234 authors, based on 14,000 citations from scientific studies, the report is the first major update since 2013. The report comes ahead of the United Nations Climate Change Conference of the Parties (COP26) in Glasgow, which will take place later this year. 

According to the report, changes in the climate system are directly related to global warming. The adverse effects can contribute to increased monsoon precipitation and extreme weather conditions, including super typhoons, tsunamis, forest fires and famine. These risks alone should prompt each of us to stand up and do our part to help address climate change. 

Code Red for Humanity

António Guterres, the UN secretary-general, warned that the report is a “code red for humanity.” He continues to say, “The evidence is irrefutable: greenhouse gas emissions from fossil-fuel burning and deforestation are choking our planet and putting billions of people at immediate risk.”

According to IPCC scientists, drastic reductions in emissions can stave off the worst of climate change but will not return the world to the more moderate weather patterns of the past.

A Sense of Urgency

In almost all emissions scenarios, temperatures are expected to rise by at least 1.5oC by 2030, as stated in a special IPCC report on global warming. The key to limiting future climate change is reaching net zero carbon dioxide (CO2) emissions, along with strong reductions in greenhouse gases (GHG).

The good news is there are solutions to mitigate the impact of climate change. The faster we respond, the quicker we can reduce these negative effects. Even better news is supply chain and procurement leaders can aid in this response, given that 90 percent of emissions are happening within our supply chains. 

Transparency in Supply Chain as a Critical Step to Sustainability

Peering into your supply chain not only helps to build a baseline of emissions and identify high emission categories and suppliers, but it also helps understand other supply chain risks, such as compliance, ethics, modern slavery and governance.

CBRE’s Global Supply Chain uses the EcoVadis platform to identify and review its supply chain’s environmental, labour, human rights, ethical, and sustainable procurement aspects. The platform also gives CBRE and our clients visibility into tier-2 supply chains. CBRE’s suppliers are evaluated, onboarded and identified as a critical next step towards gaining transparency in their operations. A supplier onboarding and risk management technology solution has also been designed as the single source for supplier information, including scorecards and assessments from the external ecosystem of data providers. The platform will have the ability to include additional supplier criteria in the future.

The Journey to Net Zero in Supply Chain

Achieving net zero will help to stabilise or reduce surface temperatures. It is seen as a guiding principle of climate change mitigation. The latest IPCC report underlines that further limiting climate change requires reaching net zero CO2 emissions and additional reductions to offset their warming impact. There is a near-linear relationship, based on physics, between the cumulative amount of CO2 emissions from human activities and the extent of observed and future warming. This means that the only way to limit global warming is to reach net zero CO2 emissions on a worldwide scale. 

Major companies worldwide have included achieving net zero in their supply chain as key to both their sustainability and profitability goals. For example, a major brewing company aims to be carbon neutral by 2040. It has identified packaging as the single largest carbon contributor, so it created a dedicated packaging sustainability team that collaborates with suppliers across several tiers of the supply chain, identifying the largest sources of emissions and working towards reducing these in line with the company’s targets.

Rather than wait for the hard regulatory deadlines, businesses have the opportunity to lead the decarbonisation transition and take actions to reduce their supply chain emissions now. Suppliers staying ahead of the curve can be successful in a future where a low carbon footprint is a requirement. Indeed, some suppliers devised innovative solutions to address sustainability concerns and are already creating first-mover advantage to win attractive contracts. DBS Bank, one of Singapore’s leading consumer banks, was one of the first companies in Asia to adopt DHL’s GoGreen climate-neutral logistics offerings back in 2017. More recently, DBS and Aetos Holdings announced a partnership that promises to fully electrify their Singapore cash and valuables transportation service by 2026.

CBRE uses supplier spend data mapped to global emission metrics to identify high emission categories and suppliers that have an outsized impact on the environment. Other companies, such as DBS, are also following this approach. It is important to prioritise decarbonisation conversations and engagement to maximise reductions instead of trying to reach all suppliers. Decarbonisation initiatives should focus on two areas: carbon-lowering solutions and obtaining detailed emissions data for the overall baseline. Hopefully, there will be a single financial and carbon system in the future, driven by carbon taxes and trading regulations. 

There is No Time to Waste: Every Chief Procurement Officer and Supply Chain Leader Must Act Now

If the world is to achieve net zero between 2030 and 2050, we need to accelerate the deployment of the low-carbon solutions we have in this decade, starting with establishing more sustainable practices within our supply chain.

To prevent the negative impact from climate change and manage its effects, we can aim to be more transparent and less carbon dependent in our supply chains. We urge all supply chain and procurement leaders to take the necessary steps to accelerate better climate action. There is still time to reverse its possible effects and ensure a safer future for the next generations.

Our future depends on it.

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