Report views decarbonising supply chains as ‘major opportunity’

21st January 2021 By: Simone Liedtke - Writer

The commitment to tackling climate change is accelerating in all sectors of society, with net-zero pledges from companies, cities, States and regions having doubled in the past year.

The World Economic Forum (WEF) says decarbonising supply chains is a major opportunity for companies to put these commitments into practice.

New research published today by the WEF and Boston Consulting Group (BCG) shows how tackling supply chain emissions can be a game changer in the global fight against climate change.

The report, titled 'Net-Zero Challenge: The Supply Chain Opportunity', analyses the top eight global supply chains that account for more than 50% of global greenhouse-gas emissions and finds that end-to-end decarbonisation of these supply chains would add as little as 1% to 4% to end-consumer costs in the medium term.

The WEF explains that the report breaks down the major sources of emissions along each of the eight major supply chains (food, construction, fashion, fast-moving consumer goods, electronics, automotive, professional services, and freight), and assesses the key levers to reduce emissions in each supply chain and shows that many can be easily deployed today and cost very little to implement.

The report also points to the global nature of many supply chains, enabling companies to support decarbonisation across borders and in countries where governments do not yet prioritize climate action.

The opportunity for impact is especially high for consumer-facing companies, whose supply chain emissions far outweigh their direct emissions from manufacturing, according to the WEF, who says these companies “can use their buying power to push for rapid decarbonisation and help fund the transition by co-investing with upstream raw-material producers, which struggle to finance the transition alone”.

The report outlines nine major actions that CEOs should take today to address supply chain emissions, including building a robust view of emissions with supplier-specific data and setting ambitious targets for emissions reductions, redesigning products and reconsidering geographical sourcing strategies to optimise for carbon dioxide.

Additionally, the report suggests cofunding abatement measures and educating suppliers on how to implement low-carbon solutions, while simultaneously engaging in industry ecosystems to share best practices and create a demand signal for green products and aligning incentives internally to ensure that decision-makers focus on lowering emissions.

WEF MD Dominic Waughray says the report “shows how companies have the opportunity to make a huge impact in the fight against climate change by also decarbonising their supply chains. The interaction between governments and companies to seize this opportunity is an important one. We welcome more leaders to join and help build momentum on this important agenda.”