The challenge of reducing Scope 3 emissions, which account for the majority of most companies’ environmental impact, lies in the complexity and length of supply chains. However, efforts in procurement to decarbonize can have a significant ripple effect throughout the supply chain.
Robert Williams, AstraZeneca’s Director of Procurement Sustainability, emphasized the potential for widespread impact during a webinar by the Science Based Targets (SBTi) initiative. He noted that educating a thousand suppliers, who in turn could influence their suppliers, could quickly escalate the message to a million suppliers.
Williams highlighted the efforts of AstraZeneca’s suppliers in reducing their Scope 3 emissions. For example, a key direct materials manufacturer found that 80% of their emissions were in their supply chain, underscoring the importance of cascading sustainability requirements down the chain.
Procurement is seen as crucial in the fight against climate change due to supply chains and Scope 3 emissions forming the bulk of most companies’ carbon footprints. Luiz Amaral, CEO of SBTi, pointed out that Scope 3 emissions are, on average, 11.4 times greater than a company’s direct emissions.
Despite challenges in reducing supply chain emissions, such as accessing supplier data and influencing suppliers, there has been significant progress. In 2022, 406 companies set Scope 3 goals with SBTi, increasing the total to 1,134 companies.
Tom Scholte, Sustainability Manager at Philips, also emphasized the broad impact of supply chain decarbonization. Philips aims for 50% of its suppliers, by spend, to commit to carbon reduction targets by 2025. By 2022, 41% of Philips’ suppliers had set science-based targets, up from 28% in 2021.
Philips employs a “carrot-and-stick” approach to incentivize suppliers. This includes incorporating emission measurement and reduction targets into their code of conduct and design standards. The company also assists suppliers in identifying high emissions risk areas and opportunities for energy efficiency improvements.
Actions to reduce emissions not only impact individual suppliers but also send market signals that can drive innovation and change in supply chains. Williams stressed the importance of these signals in promoting a shift towards more sustainable practices and materials.
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