On Thursday September 26th, our Impact Session #3 about Sustainable Supply Chains welcomed Gerben Van Kranenburg, Founder at MSW Company. The session was moderated by Jessica Peters, CSR & Sustainability Solution Manager at Greenfish.
The sustainable supply chain becomes an increasingly important topic as nowadays being green is no longer enough; organisations need to look beyond themselves, and consider their suppliers and customers. If suppliers are not undertaking initiatives to improve sustainability, it will indirectly affect the organisation’s impact, even if the organisation is actively working on making progress in this matter.
But lets first go back to the definition of a supply chain. A supply chain involves a series of steps to get a product or service to the customer. The steps include moving and transforming raw materials into finished products, transporting these products, and distributing them to their intended user.
These steps are responsible for a lot of emissions (upstream & downstream). The entities involved in the supply chain include producers, vendors, warehouses, transportation companies, distribution centers and retailers.
Which emissions play the biggest role in the supply chain?
Scope 3 emissions usually make up the greatest share of the carbon footprint, covering emissions associated with business travel, procurement, waste and water. Scope 3 includes all indirect emissions from activities of the organisation, occurring from sources that an organisation does not own or control, which means that suppliers play the biggest role in emissions in the sustainable supply chain.
There are different categories of emissions in our supply chains: raw materials, manufacture, distribution, use and disposal. A car company will have a very high percentage of emissions in “use” (the use phase of a car emits more than the distribution phase for instance) whereas a chemical company will have a higher emission in “disposal” because a lot of chemical products cannot be recycled.
The question that remains is how to reduce emissions within the supply chain, making them more sustainable. How do we convince our suppliers to be more sustainable even though they are not yet aware of what that means and the benefits that lay behind it? It is fact that suppliers first think of making profit and often do not see the link between sustainability and profitability. Organisations are having a very hard time convincing their suppliers to follow a more sustainable path.
In this matter, the relation between an organisation and its supplier is fundamental. Engaging with suppliers is key to understanding what is important to them and what challenges they face in their path to improve the sustainability of their business activities. However, sharing information is often complicated due to confidentiality (knowing the cost/price of our supplier’s product might make an organisation want to insist on a lower price).
A case study of Apple shows how they are moving forward with their suppliers. In order to achieve a more sustainable supply chain, Apple focuses on being a good example by starting to be more sustainable themselves. They concentrate on leadership. Most suppliers do not have engineers and the knowledge to move towards a more sustainable path; they need a leader to follow who advises them. Apple supports its suppliers in reducing their emissions by helping them to understand what investments they need to make (what energy source, R&D, or improved processes…). It is a win-win situation in the end because Apple’s goal is to become more sustainable, which is linked to having suppliers reducing their environmental impact.
Climate-related regulations, the cost and availability of materials and human resources are all supply chain risks. Working with suppliers to improve sustainability can help mitigate these, as well as risks related to their reputation.
As transparency and accountability become increasingly vital to investors, consumers and other stakeholders, the importance of a more sustainable supply chain increases considerably, as it underlines an organisation’s credibility.
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