December 08, 2023 | Procurement Strategy
As a responsible business committed to protecting the environment, you would be aware of the need to curb scope 3 emissions that originate in the supply chain and account for a major share of total carbon emissions.
By using spend or category-specific data, you may have succeeded in mapping these emissions. You may also have arrived at a realistic baseline of scope 3 emissions.
But this is only half the job done.
No doubt, you now have a starting point for implementing the emission reduction plan.
But merely mapping supply chain emissions isn’t enough.
To successfully implement the plan, you need the active participation and support of your supplier base. Simple as it may sound, this is no easy task.
Convincing and engaging suppliers can, in fact, pose several challenges. For varied reasons, the supplier may not want to get actively involved in the plan.
For example, the supplier may operate in an industry where high emissions are unavoidable and inherent in the products purchased.
Alternately, the supplier may not have sufficient resources to implement the emission reduction plan. Or there may, at times, be conflicting priorities.
Thus, the work of procurement is by no means over after mapping emissions across the supply chain.
In fact, the success of your emissions reduction plan now depends on how closely procurement can work (and communicate) with your suppliers.
Here are the brief steps businesses can take to implement their scope 3 emissions reduction plan:
Kickstart the emissions reduction plan by evaluating and segmenting suppliers based on:
The objective here is to classify suppliers into different priority levels or waves, focusing initially on suppliers with low ESG maturity and high emissions for pilot projects. The next category of suppliers may have varied readiness levels and require more time and resources.
To classify suppliers into different priority levels, procurement should consider the following questions:
The next step after segmenting suppliers is to establish clear goals and action plans with each supplier, including tangible steps that both sides can take to reduce emissions. Identify specific areas of action, targets and milestones.
In this goal-setting endeavor, businesses can utilize an incentive framework to reward positive efforts and milestones achieved toward lowering emissions. With such a framework, they can also introduce penalties such as financial and contract termination for non-compliance.
To encourage active participation, they can also hold workshops and engage in collaborative ideation to develop an action plan for each supplier.
To implement the emissions reduction plan, businesses need to gather and analyze performance data. They must also get buy-in and clarity from internal and external stakeholders. They also need to identify the right technology that can help them collaborate seamlessly with third parties. This will help to establish a strong governance and tracking program to assess supplier performance against defined metrics and targets.
To effectively monitor progress against set emissions reduction targets, businesses can use dashboards to visualize all data in one platform. They can look at dashboard data to evaluate performance and make data-driven decisions. They can also keep suppliers in the loop and identify specific areas of concern.
To conclude, businesses can implement their emissions reduction plan by actively working with suppliers and choosing the right technology and a strategic partner. With such a framework, they can achieve full visibility of their supply chain emissions, meet reporting requirements and gain competitive advantage in the process.
To learn more, get the GEP white paper Mapping & Reducing Scope 3 Emissions: A Quickstart Guide for Procurement Pros