01 Nov 2023

Supply Chain Decarbonization: Unlocking Sustainable Success

Viewed as a virtue, a supply chain decarbonization roadmap goes a long way in increasing an organization's scalable prospects. Building a brand value that gets the vote of confidence from its customers, a sustainable value chain has its future shaping now. Find out how exactly decarbonization leads to it.

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The conversation around decarbonization is not in its nascent stage. Conferences, senates, representatives across the globe, and summits with the objectives of going green have only underlined the urgency of the matter at hand. In a report by McKinsey, it was reported that the value chain accounts for more than 80% of GHG emissions and has more than 90% impact on air, land, water, and other natural resources. The Sustainability Consortium (TSC), an NGO focused on driving environment-first actions, found out in its study of 1700 respondents that only half of them had any idea regarding their sustainability issue in the supply chain, and only 25% actively invested and researched in their corrective efforts.

Now, the scale of operation is only going to increase two-fold, and supply chain management needs to be mindful of their carbon footprint and its implication on the ecological system ahead. This is where the decarbonization roadmap as a concept is gaining traction. The simple term holds a more profound understanding of how the world will shape itself for future generations inhabiting the planet. To understand the necessity of decarbonization, let’s first understand what the titular concept is all about, starting with the definition.

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What is supply chain decarbonization?

Reducing carbon emissions across the activities from procurement to final product delivery is called supply chain decarbonization. Achieving less CO2 numbers requires every stakeholder across the process to line in proactive and accountable methods that slow down and eventually nullify the GHG percentage in their operations. Organizations across the globe have underlined the importance of going green to elevate their presence in the market. This has led the leadership group of industries across sectors to take corrective actions while keeping the productivity metrics intact. But why are the companies headlining the conversation and the eventual course correction? Let’s find out.

The importance of decarbonizing the supply chain

Operating an enterprise is more than delivering the finest products and services across the market. It’s about how a brand fares under the guidelines applicable to every individual throughout the globe. These guidelines range from ethical supply chain practices to being proactive with environment-first actions.

For large-scale enterprises, their Scope 3 emissions often contribute to more than 50% of the total carbon footprint, and it is one of the marquee reasons for climate change, too. This led to regulatory authorities drafting pre-requisite changes in the supply chain functioning for companies across the scale to be aware of their emission metrics. Outlining a common objective of working towards a holistic environmental ecosystem, SCM adopted a mechanism that powers minimal/net-zero carbon footprint. Adding to the global good that decarbonization does, it also adds much to the brand value. With customers now more diligent about the manufacturing practices a conglomerate employs, the end stakeholder looks forward to associating themselves with a company responsible for improving society and its inhabitants.

How to decarbonize the supply chain?

The roadmap to decarbonization starts with the accountability of carbon emissions. Keeping tabs on the key indicators helps supply chain stakeholders take appropriate action. This also helps set the foundation for what will eventually form the benchmark and its relevance in the context of carbon-neutral initiatives. Here’s how management can initiate its decarbonization roadmap.

  • Adapt technology for emission analysis: Leveraging technology for the betterment of operations has always buoyed the efficiency of the organization's workforce. Employing a carbon emission assessment platform enables complete analysis of historical data that churns out key insights beneficial for improving the end-to-end value chain functioning while keeping a tab on scope emissions. When fair GHG calculations are in place, a SCM can lay down an astute plan to achieve carbon-neutral operation. This can benefit in the form of route optimization of consignment, load optimization, and use of renewable energy sources, among others.
  • Getting suppliers on-board with the latest compliance: While a company preaches and practices the environmental gospel, it sure needs to ensure that the theory finds its application among its external stakeholders, too. This involves suppliers and vendors to be aware of the norms that the company is operating with. The third parties must ensure that their emissions are well under the prescribed norms and eventually help them achieve a net-zero target.
  • Reporting and Review: With the framework in place, it is necessary for SCM to constantly have a mechanism to review the decarbonization roadmap at work. With reports covering key performance indicators, leadership gets a holistic view of what is working and what needs to be done to overcome the shortcomings. Such a review process allows complete transparency among the various functions of the value chain.
  • Investment in R&D: While technological investment does help an enterprise out, it is always beneficial to have your R&D look for economical and advanced methodology towards zero emissions strategy. With a company knowing its workings and potential areas of improvement, the solution that an in-house researcher can work on will, more often than not, have maximum impact on the problem statements.

What are the challenges when decarbonizing the supply chain?

Any new application is bound to have some practical hiccups when being implemented. In the course of its net-zero journey, conglomerates do face a fair share of execution issues. Here’s what generally makes the final list.

  • Lack of Data and accounting measures: To relay the point mentioned above for the essential data required for carbon accounting, it is also important to set the correct baseline and quantify metrics to adjudge constructive insights. Leadership needs to set what scope emissions they target and quantify action plans according to those. Lack of either will result in a chaotic approach that will generate less than satisfactory output.
  • Cost: A universal cause that drives second opinion amongst the leadership, the cost attached to a decarbonization project can overwhelm an advisory board, sometimes leading them to pull out the plug on the scope emission analytics altogether. While it does require an initial investment, the subsequent cost of carbon-neutral operation does balance out in terms of the advantages it lays out, from operation cost-optimization to reduced dependencies on traditional energy resources.
  • Collaboration: For any initiative to yield results, it needs complete collaboration across the factions of the value chain. Successful implementation requires sustained engagement from every stakeholder with timely reports and performance reviews. Lack of it will have an underperforming framework.

How does decarbonization assessment help?

A comprehensive decarbonization assessment lays out greater transparency for all the CO2 and GHG emissions in the supply chain. When the numbers are known, it is easier for leadership to assess and finalize their actions towards zero carbon initiatives. 3SC, with its platform CarbonX, does an uber job of complete analytics, helping organization chart out their response to climate change while being regulatory compliant. Minimizing risks with proactive planning and making your business more scalable, CarbonX unlocks the virtues of your organization for being a socially responsible brand. To know how the 3SC marquee platform can ease your way to a green value chain, contact us.

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