By: Jordan Hall
I recently came across an article on GreenBiz that discusses how to drive greenhouse gas (GHG) reductions in the supply chain and strategies that can help advance companies GHG management goals. Below I have summarized the key strategies that are discussed in the article. To read the full article click here.
There are several challenges that companies face when assessing emissions across their value chains. Most companies are aware that value chains can offer the largest opportunities for emission reductions, but are unsure of where to start. Assessing GHG emissions across the entire value chain is essential for any business that is serious about reducing its impact on climate change.
Here are four strategies that can help advance companies’ GHG management goals:
- Assess the entire value chain- Although companies are becoming aware that their emissions go well beyond their own operations, measuring those emissions across the value chain is still new territory. In October 2011, the Greenhouse gas protocol launched their corporate value chain (scope 3) standard, which was the first comprehensive standard for measuring and reporting emissions for an entire corporate value chain. The new standard separates emissions into 15 categories which provide a helpful framework for companies to engage suppliers, manage emissions and communicate results. Categorizing emissions in this way enables companies to focus on the activities in the value chain that offer the biggest opportunities for GHG reductions. On average, scope 3 emissions account for 80% of a company’s total emissions.
- Move beyond disclosure to set targets and achieve GHG reductions- The crucial first step in reducing your emissions is to conduct a full assessment of your companies’ value chain, as it identifies areas with the greatest emissions and enables a company to focus their resources in areas with greater opportunity for reductions. Next, companies should use this information to set targets and realize actual reductions in their GHG emissions. This can be very difficult and there’s no single solution or guide on how to set your targets, but the scope 3 standards can be used to help generate more ideas, and disclosure programs can begin to push members in the right direction.
- Increase supply chain engagement and cooperation- Engaging with suppliers is one of the best ways to achieve GHG emission reductions. Companies in the early stages of engaging with suppliers are already seeing benefits. In 2011, the Carbon Disclosure project (CDP) supply chain program collected data from 1,864 suppliers. A third of respondents said they have benefited from new revenue streams and financial savings as a result of their suppliers carbon reduction activities. Some of the benefits that are being achieved from effectively engaging with suppliers include new revenue streams, improved supply chain efficiency, reduced risk of suppliers increasing costs, reduced risk of supply chain business interruption and improved relationships with suppliers. To see the main results of the CDP’s 2012 supply chain survey click here.
- Innovation- Taking that next step beyond best practice involves innovation. As companies begin to understand the importance of greenhouse gas emissions and their relevance for the whole value chain, there will be opportunities for creative thinking around the best ways to realign business models to a low-carbon economy.
Leadership and innovation is crucial to make real progress on combating climate change. Corporate action is this arena makes good business sense as it often leads to opportunities to bolster your bottom line, reduce your risk, and discover competitive advantages.
Jordan Hall is an enthusiastic marketing professional and is responsible for marketing strategies at Energy Advantage Inc.