Months after COP26 promises, organisations must look to their supply chains

The end of last year saw businesses from across the UK make pledges towards an emission-free future. COP26 presented a perfect opportunity for companies to make pledges in line with sector-specific and general business targets. But now, a quarter of a year on, after many renewed their green commitments, it’s important to observe where businesses are at on hitting net-zero targets.

Over half of all FTSE100 companies have now committed to eliminating climate change contributions over the next 30 years. Yet, to make sure the vital progress promised last November doesn’t become just empty talk, companies should focus on the supply chain, positioning key partners’ plans in line with their own goals.

Going forwards, to guarantee visible progress on 2023 declarations and 2050 ambitions, businesses must initiate conversations with suppliers and re-evaluate their vision of supply chain best practice.

 

Curbing emissions starts outside of company headquarters

Most companies are still a long way off on the path to bettering their climate emissions. In fact, research revealed that only 25% of UK suppliers admit they are measured regularly on their carbon emission standards. More so, currently only 12% of UK suppliers are judged on their sustainable practices at the beginning of contract negotiations. With most listed companies having intricate international supply chains, eco-efforts are usually internal affairs.

On the one hand, it can be an easy win to prioritise making your direct business as clean and efficient as possible. But, if efforts are offset by using environmentally harmful suppliers, this will still cause problems for organisations. In reality, most companies report that emissions from the supply chain are several times larger than direct emissions.

Previously, supplier’s environmental impact wasn’t subject to high-level accountability. However, now with the spotlight sharply focused on climate change contributions, and the promises attached to these, it’s vital that businesses accept that sustainability battles must extend beyond the home office.

 

Taking stock of the supply chain

To start, organisations can create change by improving visibility and communication throughout tiers of suppliers. Many suppliers themselves are acknowledging a lack of sustainability measures, revealing the truth of the current situation, while presenting hope for a complete overhaul of culture in the near future.

Right from the outset, organisations can drive change by assessing suppliers on their capacity to work on environmental impact, alongside regular audits from the get-go. And this also presents an opportunity for blue-chip companies to force reluctant suppliers to make sustainability a top goal.

Yet, at the same time, buyers also must do more than just overhaul supplier selection criteria. To achieve collaboration, it must work both ways. Not only must buyers work to define sustainability best practice in the supply chain, but they must also help by equipping suppliers with the right tools to ensure progress in this area. If implemented effectively, these tools will bring about enormous benefits for all parties involved.

With this in mind, 69% of suppliers say it needs to be made easier to collaborate with buyers on sustainability. To achieve real change, over a third suggest that tools to boost their ability for information sharing would be a key first step. At the same time, the same number (35%) believe that collaboration tools are integral to helping achieve green initiatives.

But organisations must keep in mind that giving eco ultimatums to existing partners is simply not enough to bring suppliers on board with sustainability initiatives. Businesses must also start to view supply chain investments as a savvy spend on long sustainability strategies.

 

Creating real action

For organisations, boosting visibility into supplier practices isn’t simply just remedying already existing partnerships. It also enables a renewed perspective into what is working successfully, and which processes could be made more sustainable, as well as what future suppliers should look like. 

Companies must be aiming for a positive snowball effect. This starts with reigniting purpose and enabling digitisation to create more transparent relationships between suppliers and buyers. From there this will generate data and transparent insight on continuous improvement going forward.

Ultimately, companies will be looking to see evidence that a smarter approach to supplier management isn’t merely leading to lower carbon emissions – it needs to have led to an overall general business improvement. More than simply driving efficiency, organisations that can demonstrate sustainability throughout the entire value chain will also see major benefits in sales, reputation, and revenue advantages.

76% of suppliers believe that sustainability will enable them to get a one up over competitors going forward, and 57% say buyers should prioritise the most sustainable supplier against the cheapest.

Now more than ever, suppliers know of the responsibility that should exist within more open and collaborative relationships. Organisations must take a view beyond their own four walls, prioritise investment in the supply chain, and start driving real action on sustainability. This will ensure that businesses can continue to ride the wave of sustainability change spurred on by COP26.

 

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