Decarbonizing Supply Chain

Nowadays, businesses are facing mounting pressure to confront climate change and undertake the decarbonization of their operations, with a crucial obstacle residing within their complex supply chains. Decarbonizing these supply chains not only represents a moral imperative but also stands as a strategic necessity in the midst of the climate crisis. Therefore, fostering partnerships and enhancing transparency have emerged as essential strategies for companies striving to reduce their carbon footprint.

PARTNERSHIP AND TRANSPARENTCY

The bulk of carbon emissions not only stem from businesses' facilities and operations but also from their suppliers, and a lack of collaboration resulting in the absence of carbon-accounting standards and supplier performance transparency creates challenges in ensuring an effective process. Establishing partnerships across the supply chain fosters a shared commitment to sustainability, enabling companies to jointly leverage resources, exchange best practices, and invest in innovative technologies. Transparent supply chains empower businesses to trace carbon emissions linked to each product or component. By cultivating a culture of openness and collaboration, companies can drive collective action, encouraging partners to adopt eco-friendly practices and reduce carbon emissions, thereby making a substantial contribution to overall decarbonization efforts.

A CASE STUDY

Dow, a chemical company named a Global Supplier Engagement Leader in 2022, provides a GREAT illustration of success, having attained an impressive "A" score on their Supplier Engagement Rating System. The company has emphasized 3 key pillars as central to their endeavor to decarbonize the supply chain.

• Improving data: Leveraging their extensive internal data resources, including invoices, sales records, shipment data, and incorporating supplier carbon-intensity data.

• Enabling transparency: Increasing transparency throughout the supply chain by urging all suppliers to publicly disclose information regarding their carbon emissions and climate action plans. As a result of these initiatives, Dow significantly increased its utilization of value chain data and integrated supplier product carbon footprints into the company's reporting for upstream categories.

• Progressing toward Dow’s 2050 carbon-neutrality goal: Developing a dashboard that provides comprehensive data to Dow's subsidiaries and operations, facilitating data-driven planning for advancing the company's carbon accounting efforts.

These 3 pillars show Dow’s key enablers, which involve collaborating with suppliers to enhance transparency, enabling businesses to effectively monitor progress toward their suppliers' climate targets.

Decarbonizing the supply chain is one of the key enablers of business growth. Transparency and partnerships empower us to seize opportunities for reducing the carbon footprint across the supply chain. In order to enable the transition to decarbonization, addressing carbon emissions at every stage, from operations to delivery, necessitates close cooperation with all suppliers in defining the emission reduction processes.

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