Supplier Engagement is the Secret to Hitting Science-Based Targets. Here’s How You Can Make it Happen.
So you’ve made your commitment to decarbonisation public. Maybe you’ve set a Science Based Target, and your supply chain doesn’t seem quite as inscrutable as it once did. You know about Scope 3 emissions, and the opportunity to put a significant dent in your overall emissions that reducing them presents.
Given the number of actors in long-tail supply chains, keeping scrupulous records of emissions data can seem an insurmountable challenge, but that’s just the beginning of your decarbonisation story. Once you’ve identified the biggest emitters in your supply chain, what do you do with that information?
The power of supply chains to unlock decarbonisation potential isn’t lost on the Science Based Targets initiative (SBTi), which requires businesses to set scope 3 targets that cover about two-thirds of their suppliers if the supply chain accounts for over 40% of their total emissions. That means taking the time to get to know your suppliers.
If businesses are to achieve their SBTi’s, a strong relationship with suppliers based on mutual growth and a transparent approach to emissions data is indispensable. Here are a few of the ways businesses can use emissions data to inform their supplier engagement programme and build the processes that will give their supplier relationships room to evolve.
The Art of Selective Engagement
Every business that’s tried to map their supply chain understands how hard it can be to manage the sprawl. Supply chain opacity and reach are inherent limiting factors to any attempt to gather supply chain emissions data; you can’t engage with every supplier at once. Companies that take on too much to begin with risk being overwhelmed.
So focus on the small, easy victories. Be selective. It’s much more efficient to identify the biggest emitters in the supply chain, sort them by material importance to the company, and prioritise from there. If they funnel down until they’re left with a smaller, more manageable group, businesses will find they can give more time to individual suppliers and identify more opportunities to lower emissions and minimise wasted resources.
Working with a smaller pool of suppliers will allow companies to prioritise resources more efficiently, avoid burnout and develop more holistic strategies that build on past success. Once a few smaller successes have been achieved, a clearer picture of the supply chain will emerge, and it’ll be easier to take on the big stuff. Once they’ve set the example, you can inspire action from the rest of your suppliers.
Carbon Accounting, Non-Financial Reporting & Business Values
In an ESG world, while doing business is still somewhat about the bottom line, it isn’t all about the bottom line anymore. The supply chain is as much about shared respect for a businesses’ values as it is about maximising profit. As more and more economic activity is covered by ESG criteria, businesses will have to make sure that the suppliers they recruit will help them ace their non-financial obligations.
But don’t ignore the bottom line either. The price of carbon is not to be taken lightly, and neither is the cost of poor social governance. Better decisions about who to work with during the procurement stage can make all the difference when it comes to emissions reductions and supplier engagement. Bad actors in the supply change can cause reputational damage that can be tough to recover from. Making sure your suppliers are aligned with brand values in the first place is the easiest way to avoid this. Carbon accounting will give you the data you need to substantiate supplier’s climate action so you can negotiate better and make sustainable procurement decisions.
The Business Opportunities of Improved Supplier Engagement
It’s not only regulation or enforcement that will drive a sustainable future. It’s the business opportunities that sustainable development offers. Complying with regulations and passing audits, will secure market access, but meeting the expectations of consumers, streamlining operations and better engaging suppliers will help the business to grow.
To ensure supplier performance reflects the company’s wider goals, it’s worth considering the role of SBTi’s in making them achievable. Mandatory Science Based targets for suppliers might seem heavy-handed, but if the wider business has committed to an SBT, it stands to reason that its suppliers should also be pulling in that direction.
A Culture of Transparency, Mutual Growth and Friendly Competition
The view from the C-suite, sustainability department or the procurement team might not always reflect the reality of the supply chain, so accurate data that reflects what’s really happening is crucial.
Accurate carbon accounting data enables greater transparency across the whole supply chain. Open communication with suppliers can help nurture an environment where their individual circumstances are taken into account. When talking with suppliers, you can talk about the reality of emissions and best practices, evidence in hand.
Practising the art of selective engagement will allow businesses to recognise the achievements of individual suppliers and reward them accordingly. Incentivisation of suppliers through awards and surveys will improve participation in decarbonisation programmes and boost the overall welfare of the supply chain with a culture of community improvement.
Transparency promotes mutual growth in a holistic environment where everyone benefits from each other’s successes. Procurewise allows the establishment of a supply chain-wide carbon footprint baseline through an automated calculation engine that’s accessible to all suppliers. We’ll help you get suppliers started by offering them a free emissions calculation. Once they’re on board, they can be invited to join your net zero journey through a light version of the Emitwise platform, where they can upload their own emissions data. In this way, companies can create a reinforcing feedback mechanism where hitting targets with individual suppliers today provides the data and builds the relationships that will make hitting tomorrow’s targets easier.
Targeted enforcement won’t work if businesses approach their suppliers armed with nothing but assumptions. You’ll need the kind of emissions data that platforms like Emitwise can provide. Showcase your improvements and back them up with hard data. Detailed, trustworthy emissions factor data that is shareable across all operations, with key stakeholders and suppliers informs decisive supplier engagement.