Whether responding in the aftermath of extreme weather or other emergencies, well-run supply chains have a history of coming through in the clutch. For example, DHL’s Disaster Response Teams work in cooperation with the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA) to provide a global network consisting of around 500 specially trained employees who volunteer their time to be a part of the teams. Many other companies respond on an “as needed” basis to crises in their regions. Unfortunately, climate change is resulting in more extreme weather situations that are leading to more disasters requiring such support.
Today we are experiencing unprecedented dangers as a result of climate change. And once more, supply chains are being asked to play a crucial role. Even as your company takes steps to reduce its carbon footprint, consider that total greenhouse gas emissions in a typical supply chain are over 5 times greater than they are for a single company alone. It is no longer enough to focus solely the impact of your own operations.
Being an influencer in the physical supply chain is even more crucial than it is in social media. To the extent that companies can work with suppliers and customers and engage with them to reduce harmful emissions, they can have an exponentially greater impact.
When it comes to buyers influencing the behavior of suppliers in addressing global warming, they are starting to flex the “power of the purse”. They are increasingly looking at environmental performance as a requirement of doing business. To drive more action, buyers are starting to integrate environmental data into the way they evaluate suppliers on a day-to-day basis.
According to a recent report from CDP, Changing the Chain, a gigaton (one billion metric tons) of emissions savings can be realized if key suppliers to 125 of the world’s biggest corporate purchasers increase their proportion of renewable electricity by just 20%. The research was released during the UN’s recent COP25 climate conference in Madrid.
The research analyzed environmental data collected from almost 7,000 supplier companies on behalf of their customers – 125 big buyers including Walmart, L’Oréal and Samsung Electronics, along with data from 44 of these buyers that responded to a survey.
CDP found that currently, the average proportion of renewable electricity suppliers purchase makes up 11% of their total electricity. Increasing the proportion of the total electricity they purchase by 20 percentage points next year (to an average of 31%) would cut a gigaton of greenhouse gas emissions in one year, according to its analysis.
Such a move would make a substantial contribution to tackle global warming. To compare, global CO2 emissions from energy rose by around one gigaton between 2017 and 2018, from ~36 to ~37 gigatons. Put another way, a gigaton is equal to the 2017 fossil fuel CO2 emissions of Brazil and Mexico combined.
The transformation to more renewable energy sources is a pivotal starting point for corporate buyers looking to decarbonize their supply chains, but much more is needed. The same “power of the purse” approach can be used for other strategies that can reduce your carbon footprint such as the shift to electric delivery vehicles, the integration of IoT to help optimize logistics and a shift to reusable packaging for your inbound and outbound logistics. Supply chains have a reputation for rising to the occasion when emergency strikes, and there has never been more at stake. Whether your company is large or small, when it comes to carbon reduction initiatives, we can’t afford to leave any stone un-turned.
Research has shown reusable packaging systems can help reduce CO2 emissions along with other negative environmental impacts. Several companies have published reports and calculators to help you evaluate the potential environmental savings you could realize by switching to reusable packaging, such as IFCO, Orbis, Tosca, CHEP, and the Reusable Packaging Association.