Nathan Springer, Associate, Advisory Services, and Ryan Schuchard, Manager, Climate and Energy, BSR
Climate change and carbon emissions are an increasing corporate priority. We recently asked how companies can reduce carbon in their supply chains and heard from 40 companies in consumer products, manufacturing, and services during a workshop we co-hosted with the World Resources Institute (WRI) in May (detailed notes here). Three messages emerged from participating companies, which included those just starting out and others actively reporting on and reducing emissions.
Finding Unexpected Value
Companies are finding unexpected business value from supplier carbon emissions initiatives. Workshop participants who had begun work with suppliers on carbon almost invariably uncovered benefits such as cost savings, efficiencies, and improved supplier relations. Most companies identified better visibility into buying practices as a primary benefit.
One company noted that performing a scope 3 inventory analysis took an entire year but helped identify the entire supply chain. Several other companies uncovered redundancies and unnecessary costs in their buying practices. Many were surprised to discover that multiple buyers within the same company were buying from the same supplier—but at different prices. By increasing their own understanding of purchasing from specific suppliers and buying categories, companies have standardized costs and increased their negotiating power.
Putting the Objective First
It may be obvious, but defining an objective is the first step for successful supplier carbon emissions programs. Some workshop participants sought higher scores in reporting frameworks such as the Carbon Disclosure Project (CDP); others wanted to achieve carbon reductions with suppliers and capture supply chain efficiency benefits.
One consumer products company set out to reduce risk and improve sustainability in its biggest purchasing categories. To achieve this, the company assessed key suppliers using sustainability as one of five pillars and identified actionable work to reduce risk, cost, and carbon emissions in those categories.
Another consumer products company focused on the quality of its data collection and reporting. To achieve that objective, the company engaged suppliers on their willingness to partner to improve data, and to determine which suppliers report to the CDP and set carbon reduction targets. This helped the company focus on suppliers who were willing to share information—and had higher-quality data.
Getting Metrics Right
Getting metrics right is a combination of using the right metrics and getting the right information from those metrics. Most companies at the workshop struggled to gather reliable and comparable data. GHG Protocol standards and CDP Supply Chain initiative requirements have helped by providing clear methodologies for data collection.
In some cases, the best metrics are not even numbers. The General Services Administration, which spends around US$50 billion on procurement each year, asks yes-no questions on topics of interest to suppliers. This method has been a fast and simple way for GSA to determine gaps and to provide suppliers with educational materials more closely tailored to their needs and expertise.
In the next few months, BSR will meet individually with companies to better understand their objectives and needs. WRI will continue to host webinar training sessions on scope 3 emissions and to develop an online training course, which will be available in early 2014. Together, we are finalizing a project to understand barriers to supplier carbon reporting and reductions—and ways to overcome them. We will share findings at a fall workshop in China.
If your company has ideas or is seeking guidance on supply chain carbon emissions, please post your comments here or contact us to discuss.