Overview:
Cop27, the latest edition of the Conference of Parties on climate change, took the usual gathering of Politicians, CEOs, Environmentalists and diplomats from Glasgow to the (slightly warmer) Red Sea Port of Sharm El Sheik. The aim was to build on the commitments made In Glasgow and make a tangible difference to the current climate change trajectory.
COP27
As Is usual, the opening salvos of Politicians and World Leaders open the event with high level and well meaning Intentions. The real work kicks off once melee of Leaders get back on their planes (a sail boat would be preferable) and leave the negotiators to see whether they can thrash out additional commitments. The overriding aims remain the same:
- A) Urgently reduce Greenhouse Gas Emissions
- B) Building Resilience
- C) Adapting to the Impacts of Climate Change
- D) Delivering on financial commitments to finance climate action in developing countries.
Unlike COP26, this conference appears to some extent become mired In that last point; the financial commitments of developed nations to finance climate action In poorer countries. There appears to be a lack of consistency In what each country needs (to the point the options are being referred to as a ‘mosaic’ of finance options) and a willingness of those footing the bill wanting to (In some cases not being able to) contribute. The UN chief has already flown back from Bali (G20 Conference) to tell the negotiators to ‘stand and deliver’ In a last bid to push through some agreement. We will wait and see the outcomes.
Road to Net Zero
The challenge we all face to keep Global warming to no more than 1.5 degrees means as businesses and corporations we need to deliver a reduction in GHG emissions of 45% by 2030. The World Economic Forum is clear in Its view that Procurement teams will be vital in delivering the need to control and manage Emissions generated within business value chains.
As organisations start to accelerate their emissions measurement and management they soon recognise that the early reductions made within Scope 1 and 2 can be a small percentage of their overall emissions profile.
Over 75% of emissions can be generated within indirect ‘Scope 3’ supply chain network
This Is Interesting as It Is often where knowledge, access to data and visibility becomes a lot more murky particularly as a lot of Be able to quantify the Scope 3 emissions Is reliant upon third parties ‘beyond your operations‘. With the entangled web of global supply chains, this can really reach companies In all corners of the World where access to this kind of data Is difficult.
Quantification
The Power of the supply chain functions and their sourcing strategies will be vital if companies are going to deliver their Environmental commitments for their stakeholders. Although, Scope 1 and Scope 2 commitments are a relatively simple starting point to measure and manage emissions downwards.
However with the vast majority of emissions being generated in the downstream indirect elements of the supply chain, companies have to rapidly get to grips with the both the opportunity and complexity of Scope 3. If this Is done correctly, the results can certainly have a positive Impact on that ‘net zero’ target for a company.
The key Is establishing a base line. Often, we have seen companies looking to get Into such granular detail that they miss the objective of the exercise. For example, there Is little point trying to get Information on a 30 year old Jinbei van In China, that ships partially completed garments between sewing facilities, to calculate the emissions applicable to the 10 mile drive when you ship 60 CBMs of shoes via air from Shanghai to Los Angeles. It Is a case of diminishing returns at that level of detail. The focus needs to be on the most Impactful factors as a starting point.
Transformation
As GHG Emissions increasingly becomes a key factor with sourcing strategies and the partners selected within the supply chain, it brings with it an increase in complexity and a range of new skills and tools that are required to make positive environmental choices.
The key elements required to transform sourcing strategies Include:
1.Visibility
Creating visibility of the emission data across your supply chain is clearly vital in management and making positive choices. The real power comes from sharing data with supply partners and identifying emissions that need to be tackled first in any intervention planning.
2. Partnerships
Creating partnership across your supply chain with companies who are undertaking a similar shared journey towards emissions control will make the process easier. For many years, we have talked about the value of partnering with the right suppliers and this Is now even more relevant given the data extraction requirements.
3. Shared future vision
As the focus on procurement/sourcing teams builds to deliver service, quality, cost, agility, and resilience together with the overarching emissions management and control, working with supply partners with a shared future vision will become central to effective delivery.
Summary
Supply chain functions and sourcing strategies will Increasingly have emissions management high on their agenda. This will require companies and organisation to rapidly build networks of partners both in the their current supply chains as well as from new supply partners. The huge increase in data collection and management will be a large burden on many companies who are not currently structured to manage this challenge.
The collection management and decision making to manage and reduce Emissions will be of critical importance in the immediate future to rise to the challenge of keeping Global Warming to no more than 1.5 degrees. Although, there are questions that still need addressing over the consensus at COP27, there Is no doubt that companies and organisations will have to be ready.
Emissions Measurement and Management
ET2C Is a global sourcing company with over twenty years’ experience working with our clients on their sourcing strategies.
We are currently rolling out our ET2Carbon tool that enables our clients to create visibility of GHG Emissions in their indirect supply chain (Scope 3). This will enable emission hotspot identification and management across your supply chain partners. We aim to build visibility, measure emissions, and set out the ability to reduce the GHG emissions year on year.
If you would like to know more please contact us at contact@et2cint.com.
