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July 20, 2021

5 Supply Chain Sustainability Trends You Need to Know

By Megan Tuttle, Senior Manager, Sustainability

For most industries, emissions from the upstream and downstream supply chain account for the majority of the total value chain greenhouse gas emissions. According to CDP’s 2020 Global Supply Chain Report, supply chain emissions are, on average, 11.4 times greater than their own Scope 1 and Scope 2 emissions.1 This is more than double the previous CDP estimate due to improved emissions accounting techniques. The impact of supply chain emissions must be addressed if a company is to meaningfully and measurably make progress toward decarbonization. Many companies are starting to do exactly that, and creating decarbonization plans that are right for their industry and their company specifically. We’ll get into five trends we’ve seen over the past year and how your company can adopt and adapt them to fit your industry and your company:

Trend 1: Reporting & disclosure has increased across industries

Evidence of the trend:

In 2019-2020 reporting year, a CDP study found 187% growth in sustainability commitments from North American companies alone, with 115 new companies committing to bold climate action, like RE100 and SBTi.2

Additionally, ESG assets under management are projected to grow 15% year on year to reach over $140 trillion in 2025, driven by growth in the US and EU as well as Japan and Canada.3

Why it matters:

Supply chain transparency is becoming the norm and customers, shareholders, and supply chain partners are demanding this. Stakeholders want to know what is happening in the supply chain, whether from a product efficacy and safety perspective of the customer or from a margin and profitability perspective of shareholders and investors. Disclosure frameworks and regulatory agencies are solidifying disclosure & data requirements, not only making access to data easier for stakeholders but also making benchmarking and comparison more straightforward as well.

How to get on board:

In order to meet stakeholder expectations in supply chain transparency, it is critical to get a handle on your supply chain emissions and those of supply chains you’re a part of. Understanding where your hotspots are from an emissions perspective can help you prioritize time and capital investment in mitigating them. Once you know what your supply chain emissions are and have a plan to address them, begin reporting publicly on your sustainability initiatives and emissions reductions on a regular cadence. Whether that is through your company’s sustainability report leveraging one of the ESG frameworks or reporting to a public forum like CDP, your consumers and investors will positively respond with their wallets.

Trend 2: As we see Trend #1 gain steam and companies increase public reporting and disclosure, we are seeing those same companies publicly announce data driven goals, like SBTi or emissions reduction goals, which are inclusive of their supply chain emissions

Evidence of the trend:

Starting in July 2021, Microsoft will implement new procurement practices and tools to begin incentivizing suppliers to reduce their own Scope 1, 2, and 3 emissions and report progress against targets.5

Why it matters:

Companies are working to create shared value by helping their supply chain support their goals. Not only does this demonstrate the importance of progress towards decarbonization and sustainability, but it also shows that the supplier-customer relationship is expanding beyond the transactional, to a more collaborative and holistic partnership. Sustainability is no longer a nice-to-have, it is a meaningful part of the supplier-customer relationship, alongside price, quality, and service. As a supplier, finding a way to support your customers’ goals, in each of the categories is beneficial to your relationship, positions your company  as a strategic supplier since you’re able to go beyond what is mandatory and support your customers’ strategic initiatives, like decarbonization and sustainability.

How to get on board:

Identify ways to amplify and contribute to your customer’s supply chain goal. This doesn’t necessarily mean adopting their exact goal as your own; your company likely has a different business model and different strengths, but contributing to their desired sustainability outcomes through a goal that is right for your company is not only good for your business relationship but can also be a relatively quick and easy way to start or grow in your sustainability journey.

Trend 3: Not only are companies teaming up with their supply chains, but they’re teaming up with their peers and competitors to solve system-wide issues they experience when addressing supply chain and Scope 3 emissions

Evidence of the trend:

Amazon and Google are two founders of the Business Alliance to Scale Climate Solutions, two organizations who are frequently fierce competitors for market share and talent, have come together to address the shared issue of sustainability.

Why it matters:

The purpose of these groups, and other industry groups like them, is to scale successful climate solutions and serve as a knowledge-sharing network. There are issues that cannot be solved alone or with only your direct supply chain partners, so plugging into different resource and industry groups can help break down silos which naturally exist among competitors and those in different industries. Groups like these allow you to work across the full supply chain to better understand the complexities of sustainability issues within your industry from those who you may not interact with directly or in such a focused way. Building these types of relationships can help to identify tactical and strategic ways to improve the sustainability of the supply chain overall and therefore your sustainability and decarbonization outcomes as well.

How to get on board:

No matter the size of your company, you can join any number of relevant industry and sustainability groups, but it’s important to consider how you can best apply your resources and expertise. In order to identify which groups you should join, consider what your strengths are as a company and where you’d be best positioned to help your industry in addition to what your trickiest sustainability and decarbonization issues are and where you need the most help. Cultivating relationships across your supply chain will not only make problem solving easier through crowdsourcing and the creation of true shared value but will also ease the burden and barriers of solving your most complex supply chain sustainability issues.

Trend 4: Using carbon removal to help close the gap to net zero for supply chain emissions specifically, and to accelerate the transition to net zero

Evidence of the trend:

The number of companies that have announced public decarbonization commitments since the Paris Agreement has increased 5x.6 And while not all are leveraging carbon removal offsets, many are, as evidenced by the growth in the market; since the Paris Agreement was signed in December 2015, the volume of voluntary carbon offsets issued annually has grown 4x.7

Why it matters:

Achieving net zero emissions is critical to maintain our planetary boundaries, according to science from the Paris Agreement. However, true net zero requires the entire planet to decarbonize and achieve net zero emissions, which is difficult to execute and contribute to as a company if only focusing on your footprint. When you’ve made all possible reductions in your own operation’s emissions and in your supply chain emissions in line with a 1.5oC scenario pathway, you can then look to levers outside your total footprint, like carbon offsets. That goal of net zero then becomes more achievable, with organizations like SBTi finding roles for offsets within their “science-based net zero” guidance, which is set to be published in the fall of 2021. In draft form, the guidance states that “companies should consider undertaking efforts to compensate unabated emission in the transition to net-zero as a way to contribute to the global transition to net-zero”.8  Specifically, for optional compensation activities in the science-based net zero draft guidance, traditional carbon offsets are eligible, and a financial indicator is preferred to MTCO2e. For neutralization activities, the outcome must result in carbon removal with sufficient permanence to counterbalance unabated emissions, so only removal offsets are eligible. In addition to the scientific community, the investor community announced guidance in March 2021 through the Net Zero Investment Framework, which provides guidance on how investors can achieve net zero emissions at a portfolio and investment level.  The Institutional Investors Group on Climate Change, which authored this Framework, suggests that carbon offsets purchased in regulated carbon markets designed to meet the net-zero emissions goal can be used as part of this strategy.9

How to get on board:

Navigating the various frameworks on a global level and considering each stakeholder group can be tricky at best. With our global presence and dedicated sustainability and carbon teams, we can help you identify if and where offsets play a role in your decarbonization strategy and design a carbon offset procurement strategy that is right for your company, your goals, and your key stakeholders.

Trend 5: One way that companies are addressing their climate-related business risk is through measuring and then managing the hotspots within their supply chain through procurement decisions and writing sustainability metrics into the buying specification

Evidence of the trend:

Walmart has a public goal to have at least 70% of US goods bought from suppliers that participate in The Sustainability Consortium’s THESIS Index survey.10

Why it matters:

Sustainability-related KPIs are now inherent in the sourcing specification, meaning that sustainability must be present in the same way that quality, structure, taste, etc. are, in order for the material or product to be sourced. Tying back to a point from Trend Two: sustainability and decarbonization are no longer a nice-to-have, they’re part of the expectation and increasingly becoming standard ways of working as a supplier to your customers.

How to get on board:

Companies have different requirements for their supply chain sustainability reporting programs, but thankfully most tie to industry and ESG frameworks like CDP, HIGG, etc. We can help your company leverage these reporting frameworks into a broader decarbonization strategy, which also enables you to report to your customer and meet the sustainability KPIs in the specification.

Start addressing and making progress toward your customers’ supply chain goals and work with your supply chain to help you do so. There are multiple ways to get on board with these trends, but finding the right way to do so for your company will make for a meaningful and lasting sustainability strategy. Focusing on your supply chain sustainability and Scope 3 emissions will help your business relationship and your sustainability outcomes, and Edison can help you get started. Check out our sustainability page and reach out to get started.

[1] CDP 2020 Global Supply Chain Report
[2] 2019-2020 CDP North America Annual Report
[3] Bloomberg ESG Analysis 2021
[4] A 2020 IBM survey found that 8 in 10 respondents indicate sustainability is important to them, while 6 in 10 are willing to change their shopping habits to reduce environmental impact
[5] Microsoft Sustainability Announcement 2020
[6] Natural Capital Partners 2020 Survey
[7] Taskforce on Scaling Voluntary Carbon Markets, 2021
[8] Net-Zero – Science Based Targets
[9] Net Zero Investment Framework-Implementation Guidance, 2021
[10] Walmart’s Sustainability Index Program


Contact Edison Energy today to learn more about how we can help your business achieve its sustainability goals.

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