Let’s Cut Emissions Together: How Accurate Emissions Data can Drive the Collaborative Approach to Stakeholder Engagement.

For businesses with long supply chains, it must seem impossible to keep up with the public, regulatory, and investor expectations about corporate sustainability reporting and disclosures. What was once a concern elsewhere, your supplier’s emissions, for example, now have to be accounted for, reported on, and mitigated not just for regulatory purposes but also for reputational, financial, and fiduciary purposes.

Businesses’ expanded supply chain responsibilities necessitate proactive engagement with the supply chain. Approaches to supplier engagement run the gamut from light-touch and informal to set-in-stone contractual deals built on auditing, regulation and enforcement. These approaches are sometimes dictated by the size of the business, the size of the supply chain, or the state of existing relationships with suppliers, but neither will be effective without accurate emissions data.

Choosing the right supplier engagement strategy can shift the balance from taking responsibility to maximising opportunity in the supply chain. Here’s how to leverage your emissions data to make that happen.

Trust and Transparency are the Building Blocks of Successful Supplier Engagement…

…And good emissions data is the mortar that holds it all together. Whatever the approach, trust and transparency between the core of the business and its suppliers are essential. A business has to know that the data it uses to account for supply chain emissions provides just as solid a foundation for reporting as its financial data.

Without trustworthy emissions data, how can a company build a cohesive supply chain strategy? Accurate emissions data drawn from stakeholders themselves and verified by a credible third party like Emitwise allows companies to build trust in their supply chain emissions policies, choose more sustainable suppliers, and build mutually beneficial long-term relationships.

Collaboration & Coordination: An Engagement Sandwich

Research from the University of Cambridge recognises the value of a collaborative approach to supplier engagement. In a perfect world, every business could devote the time and resources to maximising emissions reductions in concert with each individual supplier for a mutually beneficial, sustainable partnership.

However, they also acknowledge “that this insufficiently captures the complexity of actual company-supplier relations”. In reality, supply chains are far more complex in composition and the relationships they’re built from for supplier-centric collaboration to be viable in every instance.

Any business that’s tried to bake a supplier engagement strategy into an existing supply chain would likely agree. It’s a shame gathering emissions data wasn’t already a consideration when supply chains were formed, then this wouldn’t be an issue.

Therefore, approaches to supplier engagement exist on a spectrum with a coordinated approach at one end and a collaborative one at the other:

  • Coordinated: Risk-driven, transactional. Companies integrate industry standards into procurement contracts to mitigate risk. This top-down approach is enforced by auditing, where suppliers are contractually obliged to reduce emissions at rates set by the parent company.
  • Collaborative: Driven by promotion, innovation and partnership. Maintains supplier agency with a bi-directional model where both parties look for improvement opportunities. This approach requires flexibility and open communication to establish common ground with suppliers on a case-by-case basis.

Of the two approaches, the collaborative approach offers the most opportunity for businesses to grow with their suppliers and discover innovative methods to reduce emissions.

The coordinated approach gives control to the parent company, which can dictate terms based on its emissions reduction goals, secure in the knowledge that suppliers are contractually obliged to comply. 

The coordinated approach might be preferable for businesses with a broad range of suppliers in a large supply chain as it’s less time and resource-intensive. However, relations between the business and the suppliers might be strained under a transactional model, and there will be little room to explore new possibilities for emissions reduction.

Help Your Suppliers to Help You: Carbon Accounting & Supplier Collaboration

Businesses with more manageable supply chains will undoubtedly find collaboration more attractive, allowing more meaningful supplier relationships to develop and new ideas to flourish.

Supplier collaboration is the approach of choice for companies looking to innovate in their sustainability strategy. The difficulty comes from getting the supply chain to a place where businesses and stakeholders can engage meaningfully; accurate emissions data makes that possible.

Carbon accounting allows continuous monitoring and new collaborative approaches. It helps businesses determine risk by carrying out a GHG inventory in the first instance so businesses and their suppliers can ensure they speak the same language from the start. From there, businesses can monitor supplier performance over time and help suppliers monitor their own emissions. Emitwise can guide your carbon accounting journey by offering suppliers a free emissions calculation.

Businesses might think that the size and scope of their supply chain precludes a collaborative approach, but with carbon accounting, businesses can have the best of both worlds.

Using Data to Coordinate: Setting Clear Goals

Carbon accounting data can also be used to improve the effectiveness of a risk-driven approach. Emitwise’s platform is designed with accessibility and usability at its heart, enabling mutually beneficial partnerships where they can make their expectations on emissions clear to their suppliers while also providing them with the data and capacity-building support they need to meet those expectations.

Make Your Engagement Processes Count

The Emitwise platform’s granular, product-level approach to emissions factors sets it apart and enables companies to fine-tune their supplier engagement strategy to align with individual suppliers’ emissions stories. At the same time, emissions data centralised in the platform gives businesses a pool of knowledge they can draw from easily when collaborating with suppliers.

An essential ingredient in the collaborative approach is the Procurewise supplier emissions management programme, which makes it easy for suppliers to feed information back to the company. Thus, data collection is never a one-way street, even in long supply chains.

Businesses that are ready to earnestly accept their scope 3 responsibilities and maximise their involvement in the supply chain will need to decide precisely how they will engage with their stakeholders. With the specificity and accuracy that platforms like Emitwise offer, the choice between collaboration and coordination needn’t be binary. When you start your emissions reduction journey, make sure you take your stakeholders along for the ride. Emitwise can show you how.