Green Supply Chains: Strategies for Decarbonizing Supply Chains

Three Steps to Reducing Carbon Emissions in Supply Chain Management and Procurement

In an increasingly sustainability-oriented world, decarbonizing your own company’s supply chain is unavoidable. By reducing greenhouse gas emissions and promoting sustainable practices, you can take ecological responsibility, which will strengthen your brand’s reputation. A sustainable supply chain doesn’t just fulfill regulatory requirements. It also makes you more competitive, because it reduces costs and boosts your resilience in situations of risk. Generally speaking, decarbonizing your supply chain is a strategic investment that provides opportunities for innovation, differentiation, and long-term profitability.

The following questions about sustainability may arise going forward:

  • What are the reporting duties that I’m going to have to fulfill in carbon accounting?
  • Where are the greatest greenhouse gas emissions in my business and along my supply chain?
  • What will the cost impact of carbon price changes be on my business?
  • How and at which suppliers, locations, and so on can I significantly reduce my carbon footprint?
  • How can SCM and procurement add the most value in decarbonizing my supply chain?

We’ll help you answer these and other questions on the topic of carbon accounting and decarbonization. That way you’ll get a quick and pragmatic overview of your emissions drivers. The insights this will give you will form the basis for reporting in compliance with leading sustainability reporting standards and frameworks, and for your emissions strategy and decarbonization roadmap and their implementation.

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The Role of the Supply Chain in Emissions

The extent to which the supply chain contributes to Scope 3 emissions depends on the industry. The following overview shows you a few examples.

The greatest challenge in this area is obtaining full transparency about current Scope 3 emissions produced in connection with your company, because a lot of suppliers don’t yet provide these figures. That’s why we recommend a pragmatic hot spot analysis using emissions factors that estimate the primary emissions sources and then validate and complement them step by step using dependable figures. The aim is not to obtain perfect figures right away. It is to begin on a solid foundation and work towards increased accuracy in the figures produced over time. This approach allows you to begin implementing targeted emissions reduction measures quickly.

 

Other challenges include:

  • Necessary investments in technology and infrastructure as well as staff expertise
  • Complying with growing environmental regulations and standards, such as those pertaining to reporting
  • The need for continuous innovation, so as to execute and identify ecofriendly practices
  • The need to work efficiently with suppliers, partners, etc., to ensure that the supply chain is fully decarbonized

Relevant Characteristics of a Sustainable Supply Chain

A sustainable supply chain uses resources efficiently and reduces environmental burdens by employing renewable energies and ecofriendly materials. Costs are reduced through the use of efficient transport and logistics solutions and optimized warehousing. A green supply chain incorporates transparent processes that make it possible to measure energy consumption and its effects along the whole supply chain. Businesses work closely with suppliers and partners to develop innovative solutions and achieve ecological targets. They also consciously take responsibility and actively seek to protect resources.

The following aspects of supply chain sustainability can be promoted:

  • Identifying and reducing the supply chain’s biggest emissions sources
  • Sustainable logistic solutions based on an analysis of your company’s own modes of transport
    • Route optimization
    • Alternative fuels
    • Electric vehicles
  • Renewable energy use
  • Software tools to simplify collaboration with suppliers and identify relevant potential to reduce emissions for suppliers, etc.
     

This is how you, with the help of our expert consultants, can optimize the decarbonization of your supply chain.

1st step: Hot Spot Assessment

Our Expertise

  • Identify your main emission sources (“hot spots”) along the value chain (using the Greenhouse Gas Protocol for Scopes 1, 2, and 3).
  • Conduct emissions workshops to prioritize your most important commodity groups, suppliers, business areas, and areas of action.
  • Define your greenhouse gas emission data model and calculation logic (“CO2e baselining”): as the project progresses, we take an “iterative path” from expenditure-based secondary data (hot spot assessment) to company-specific primary data.

Your Benefits

  • Confidence: this will give you certainty about carbon hot spots in your supply chain, as well as data transparency. That in turn will allow you to prepare properly for the coming demands of different stakeholders.
  • Guaranteed competitiveness: good carbon accounting gives you transparency about carbon emissions, as well as an accurate idea about your future costs. This allows you to prepare in the best possible way for rising carbon prices.
  • Information advantage: integrating robust carbon data helps you not only in your reporting, but also when it comes to making decisions in procurement and top management.
2nd Step: Developing an Emissions Strategy, Targets, and Roadmap

Our Expertise

  1. Define decarbonization targets and baseline.
  2. Derive custom decarbonization measures.
  3. Develop a decarbonization strategy and roadmap.

Your Benefits

  • Value enhancement: you concentrate on the “right” action areas and suppliers, because your decarbonization strategy and roadmap pursue only those targets that contribute to achieving your sustainability goals.
  • Compliance: make an active contribution to safeguarding future generations’ quality of life by observing ecological standards and regulations. This helps you safeguard your social license to operate.
  • Reputation: enhance your company’s reputation through a strategic approach to decarbonization that delivers visible results and clearly demonstrates your value proposition to internal and external stakeholders.
3rd Step: Pilot and Roll-Out Decarbonization Program

Our Expertise

We will launch pilot and lighthouse projects together with you, so that you can move quickly to operative implementation. These will either deliver “quick wins” or serve as blueprints for a Group-wide roll-out. We look at prioritized commodity groups, suppliers, and business areas while establishing a reporting structure and governance processes. That’s how we get your decarbonization path off to the best possible start and pave the way for demonstrably low-carbon supply chains. The final step, therefore, involves the following aspects:

  1. Execute emission reduction projects (such as material and waste reduction, transportation optimization, and circular economy).
  2. Roll out emissions reduction initiatives with strategic partners and suppliers.
  3. Establish impact management/controlling and reporting structure.

Your Benefits

  • Ensure competitiveness: realize and implement your sustainability ambitions to ensure long-term competitiveness for your business in an increasingly regulated business environment.
  • Value enhancement: combine emissions-related and economic aspects through targeted initiatives. This gives you twice the added value within your company.
  • Secure your supply lines and make your business resilient: you can make your business processes future-proof and resilient by deploying holistic carbon management and targeted decarbonization measures.


HÖVELER HOLZMANN - a valantic company

Bahnstraße 16
40212 Düsseldorf
Tel.: +49 (0) 211 - 56 38 75 - 0
Fax: +49 (0) 211 - 56 38 75 - 69
Mail: info@hoeveler-holzmann.com