Decarbonizing Supply Chain

May 12, 2023

The pressure on companies to reduce carbon emissions increases as stakeholders focus on green initiatives. Companies now face a more extensive challenge to monitor, measure, audit, and report emissions data from extended supply chains, known as Scope 3 emissions. With Scope 3 emissions typically much higher than Scope 1 and 2, undercounting them is a significant corporate risk. This puts companies under pressure to monitor and work with suppliers to reduce their carbon footprints. However, a range of measurement frameworks and a lack of clarity on implementing sustainable practices can complicate this requirement. In addition, supply chains have been affected by COVID-19, shifting geopolitical relationships and the continuing Ukraine conflict. Traditionally focused on cost and quality, procurement units must now focus on Scope 3 emissions and the impact on suppliers further down the supply chain. Silver bullet solutions are emerging, with specialist procurement entities extending their traditional roles to advise on Scope 3 emissions and provide advisory services to transition to net zero. As we advance, the requirements in the procurement marketplace will become more complex, demanding, and time-consuming as regulators expect ESG deliverables.

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