Corporate Social Responsibility (CSR) has evolved beyond being just a trend. Recent surveys indicate a growing emphasis on environmental and sustainability initiatives within corporate priorities. A significant majority of sourcing professionals anticipate a rising importance of sustainability in supplier evaluations in the coming years. Central to this conversation is the topic of Scope 3 emissions originating from supplier actions. Sourcing teams are at the forefront of tackling these emissions, aligning their strategies with overarching sustainability goals. This blog post draws insights from Keelvar's Buyer's Book Vol. III, highlighting strategies to enact sustainable sourcing and mitigate Scope 3 emissions.
The Current Landscape and the Role of Sourcing Teams
While it's inspiring to see the shift towards sustainability, several obstacles still remain. Today, numerous logistics service providers (LSPs) aren't proactive in setting or measuring CO2 emission reduction goals. Consequently, buyers of logistics services might be the ones pushing for change, leveraging incentives to promote environmentally conscious behaviors. Sourcing teams at large corporations are pivotal in this movement. By strategically setting incentives, they can guide LSPs towards sustainability. But striking a balance between sustainability and business goals is essential.
Optimal investment in sustainable sourcing is paramount. It's about striking the right balance between cost, service, supplier integration, and environmental objectives. Modern sourcing technology aids this balancing act. Using detailed CO2 estimations and apt incentive management, businesses can foster adoption of best practices via sourcing optimization.
Unpacking Scope 3 Emissions
The Greenhouse Gas (GHG) Protocol, an international standard for emission accounting, classifies emissions into three scopes:
- Scope 1: Direct emissions from company-owned equipment or processes.
- Scope 2: Indirect emissions stemming from electricity, steam, heating, and cooling that the company purchases.
- Scope 3: All other indirect emissions within the company's value chain, representing the bulk of challenges companies face in quantifying their entire carbon footprint.
Recent research by the Carbon Trust shows that Scope 3 emissions account for 65% to 95% of most companies' overall carbon impact. Unfortunately, many firms lack clear targets or transparency in reporting, leading to claims of "greenwashing." However, leaders who set clear benchmarks can be pillars of inspiration.
To address Scope 3 emissions effectively, businesses need robust data from their suppliers and innovative strategies to lower these emissions. Tools like the GLEC Framework, developed by the Global Logistics Emissions Council, provide methodologies for consistent calculation and reporting of GHG footprints across supply chains.
Towards a Sustainable Sourcing Process
Sustainable sourcing requires a shift in mindset. While spreadsheets may be suitable for preliminary analysis, they aren't adequate for complex, future-oriented business operations. The need for comprehensive SaaS applications that gather supplier data and automate reasoning processes is evident. Such tools ensure that data management, analysis, and reporting are streamlined, setting the stage for sustainability at scale.
The journey to sustainable sourcing, especially addressing Scope 3 emissions, is multifaceted. As businesses evolve, so must their tools and approaches. By emphasizing the importance of data-driven decisions, optimizing investments, and leveraging next-gen technologies, businesses can take significant strides towards a sustainable, low-carbon future.
