Climate change has emerged as one of the most pressing challenges of our times, as human development and consumption threaten to wreak havoc on our planet. In 2015, governments around the world pledged to prevent global warming from exceeding 2 degrees Celsius in the Paris Agreement. This commitment requires not only government action, but also for businesses and civil society to reduce their impact on the environment.
The consumer goods market in particular, which is expected to experience significant growth in the coming years, has a critical role to play in reducing greenhouse gas emissions and achieving the UN 2050 emission targets. According to McKinsey, the supply chain of the typical company providing consumer goods is responsible for more than 80% of its greenhouse-gas emissions and over 90% of its impact on air, water, land, biodiversity and geological resources.
Every step in the supply chain impacts the environment, beginning with sourcing materials and production to packaging, distribution, consumption and end-of-life disposal. As businesses strive to reduce carbon emissions, sustainable supply chains will become increasingly important in creating a cleaner, more efficient, carbon-neutral future.
Supply Chains Are Feeling the Heat
Businesses are under increasing pressure from government bodies, investors, corporate buyers and consumers to produce evidence of sustainability efforts and support carbon taxes and carbon-reduction targets, so monitoring carbon emissions is a top priority for brands, retailers and their suppliers.
While some are struggling to respond, it is encouraging to know that more than 4,000 businesses and financial institutions are working with the Science Based Targets initiative (SBTi) to reduce their emissions in line with climate science, with more than 1,500 committing to achieve net-zero by 2050.
The Need to Track and Tackle Carbon Emissions
The need for more visibility and transparency in global supply chains has been a key issue for years. In the past, companies only had visibility into their direct operations, leaving them and their customers unaware of the end product’s full environmental impact.
Today, businesses need to look at supply chain efficiency as more than simple cost-saving measures and track each step from end to end to accurately measure the total carbon footprint. It’s not enough to just focus on top-tier suppliers; the entire supply chain needs to be taken into account. This means tracking sourcing, transportation and production processes for all suppliers and partners in the supply chain.
However, this is easier said than done. Many businesses are still facing challenges when it comes to collecting the data needed for carbon footprint assessment. They lack the necessary expertise or technology to track and measure emissions across their supply chain, making it difficult to identify sources of emissions and opportunities for improvement. Poor carbon-accounting standards, heavy reliance on manual processes, and lack of collaboration among supply chain stakeholders are all significant obstacles to decarbonization.
Data-driven Decisions Lead the Way to a Sustainable Future
Collecting and analyzing verifiable data along the supply chain is key to tracking, measuring and reducing emissions. For a long time, brands and retailers have been struggling with Excel spreadsheets and manual processes to capture sustainability data from suppliers—leading to inefficiencies, false positives and non-compliance.
That’s why more and more companies are now turning to digital solutions that help them to manage supply chain data and view, trace, monitor and report on supply chain sustainability performance to ultimately identify opportunities and reduce emissions.
Here’s how digitization can help achieve your sustainability goals:
• With collaborative supply chain discovery and mapping, you can map your supply chains all the way down to raw materials of source.
• Visualize your supply chain in easily understandable formats: linear, network and geographical views.
• Use automated corrective and preventive actions (CAPAs) to monitor progress and compliance with your sustainability targets.
• Get real-time insights from reports and analytics that accurately track emissions and resource consumption.
• You can configure your own audit format or use pre-built questionnaires on social, environmental and compliance issues.
• Easily plan the schedule of upcoming audits, issue corrective actions and follow up on their progress.
The goal is to move towards a circular economy, where the whole supply chain operates with minimal emissions, waste and energy consumption.
The Journey to Sustainability
The journey toward a sustainable and carbon-neutral supply chain is not easy, but it’s essential for the industry’s long-term success. We must measure, track and monitor our carbon footprints to understand where we are and what changes need to be made. With the right digital tools, we can start progressing towards a more sustainable supply chain and build trust with customers and suppliers who share a commitment to environmental responsibility.
Carlos Moncayo is CEO and co-founder of Inspectorio, a provider of supply chain management software.