Supply chains play a crucial role in reducing carbon emissions of a company, since supply chains are responsible for a significant portion of those emissions, by the CDP they are 11.4 times larger than direct emissions on average.
Using buyers as a mandatory or regulatory force can bring many more companies into the processes of measuring and reducing GHG emissions, as well as implementing other ESG principles.
In 2019, net-zero pledges covered only 16% of the global economy. However, the Net Zero Tracer report shows that national government net-zero targets now cover 91% of global GDP, and as a result, 80% of the global population is now covered by net-zero targets. This is due in part to demands from the world's largest 2,000 publicly listed companies by revenue, which permeate throughout their suppliers globally.
A good example from the public sector in the US where The US Federal Government impose Greenhouse Gas (GHG) emission disclosures on major suppliers.
As part of the Biden-Harris Administration's efforts to address climate change (see Federal Sustainability Plan) and promote clean energy industries and jobs, according to the roadmap for building an economy resilient to climate change impacts, at Nov 2022 The White House present the **Federal Supplier Climate Risks and Resilience Rule.** Lexology report estimate that this will affect 5,766 organization. The Federal government is the largest purchaser in the world!
For more details about the different jurisdiction, and the requirement see our review on Sustainability Reporting.
On May 2023 the SBTi published a new guide for Developing and Achieving Scope 3 Supplier Engagement Targets, with a full set of materials and resources for companies to use when engaging their suppliers here.
Unlocking the power of supply chains is critical to achieving decarbonization goals. Supply chains can enable the widespread adoption of low-carbon technologies, processes, and practices across different sectors and industries. They can also drive innovation, increase efficiency, and reduce costs, thereby creating economic and social benefits.
Supply chains can be decarbonized by upgrading to more energy-efficient machinery, shifting towards low-carbon and renewable energy sources, and implementing best practice manufacturing procedures.
<aside> 💡 Vert offer simple calculators to provide fast assessment of potential projects for decarbonization. For some of the states Vert can also check eligibility for financing solutions with our partners.
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