The largest source of carbon emissions for most companies occurs in their supply chain.
On average, according to a study by CDP, “Supply chain emissions account for 11.4x that of a company’s direct emissions”.
In order to achieve net zero, and to be in line with SBTi criteria, companies must tackle these emissions. But because Scope 3 emissions are more difficult to measure and account for than emissions in Scopes 1 and 2, they are often addressed last in emissions reduction plans.
A supply chain transparency policy is a great way for consumer products companies to demonstrate their commitment to sustainability, as well as responsible sourcing and ethical practices.
It means engaging with suppliers to ensure that the policy is correctly designed and implemented, accelerating supply chain decarbonisation, and fostering trust and informed decision-making among consumers.
The role of supplier engagement in Scope 3
According to the SBTi, “activating wide-scale decarbonization efforts across supply chains is one of the most critical, effective pathways to reach global net-zero.”
Although these emissions are outside direct control, setting reduction targets and collaborating with suppliers to reduce them is crucial. This approach not only prepares companies for future regulations but also enhances their reputation as environmental leaders.
Improving supply chain transparency offers clear benefits by providing visibility into emission sources and making it easier to identify and address high-impact areas. This leads to more effective and sustained emissions reductions, ultimately boosting long-term business success.
Identifying key materials and suppliers responsible for significant emissions allows companies to create focused reduction plans. This targeted strategy maximises the impact of sustainability efforts, ensuring meaningful progress toward climate goals and fostering a more sustainable future for all stakeholders.
But how do you persuade suppliers that this is also in their best interests?
Incentivising suppliers to share information
“Reaching global net zero” is an important goal — and businesses must comply with climate legislation to calculate and reduce their emissions. But it can feel like the payoff is a long way in the future, and even then the benefits aren’t exactly concrete.
In order to persuade your suppliers to share their operational information with you, you can point to several benefits that demonstrate how supply chain transparency also helps your business and theirs.
One compelling motivation is the competitive advantage companies gain by operating more sustainably. Gaining full transparency into your supply chain, and reducing supply chain emissions helps you improve operational efficiency, save costs, and potentially identify opportunities for innovation. Being demonstrably transparent will also strengthen your brand reputation, potentially attracting socially aware customers.
Our article about Sustainability as a revenue driver explains how implementing corporate sustainability initiatives can improve your company’s long-term financial performance, and deliver faster growth and more market share.
With concrete commercial benefits like this backing up the environmental imperative, it should be straightforward to agree some shared goals with your suppliers.
Communication of shared goals and top-down planning
Once your suppliers are on board in principle, it’s time to make a plan, including company-specific goals and goals you share with your suppliers.
An example of a shared goal could be as simple — and ambitious — as “growth within planetary boundaries”.
Using this goal as a North Star, you can build a top down strategy that leads both your companies towards reducing emissions and achieving net zero before 2050.
You will need to plan to accurately measure your emissions, before taking action to reduce them. As you work out your plan in more detail, both you and your suppliers will be able to compare notes, understand each other’s goals, and align them where relevant.
In order to effectively manage your suppliers’ sustainability performance, it is critically important that you work together to measure and report on emissions, in full detail, and as accurately as possible.
Dayrize provides a platform for easy data sharing from suppliers to retailers
It boils down to data. Lots of data. Collecting and sharing carbon emissions data is the best way to make a strategy that helps you and your suppliers support each other’s decarbonization initiatives.
All this data needs gathering, verifying, and to varying degrees, completing with additional information where gaps exist.
This is an enormous data management task, which, if improperly performed, may not reveal the full extent of your — and your suppliers’ — carbon footprint. This in turn could lead to potential accusations of greenwashing.
Dayrize can help by providing holistic sustainability intelligence and actionable insights that identify your products’ sustainability impacts. Our AI-powered SAAS platform gives you the power to measure, manage, and monitor the environmental and social impact of your full product range on one platform.
Even better, it’s set up to easily share this data with your suppliers.
Dayrize aims to revolutionise Business & Supplier collaboration
Dayrize fosters a powerful sense of community by uniting suppliers and retailers around a shared goal, in one platform. We consolidate all your company’s and suppliers’ data into a single, streamlined database, simplifying data management and analysis.
Sharing resources by aggregating your sustainability data in this way delivers mutual cost savings and improved efficiency. Because all parties’ results are continuously updated in the live platform, it enables everyone to accelerate their decarbonization efforts.
The more suppliers you connect to our multi-tenancy environment, the more data is made available. This leads to greater accuracy, more realistic targets, and more precise reduction strategies. It’s also much easier to track progress towards your shared goals.
“Engaging suppliers is more than a logistical task — it’s a strategic necessity for achieving net-zero goals and supply chain transparency. It drives sustainability, fosters innovation, and enhances brand reputation. By collaborating closely with suppliers to share data and set shared objectives, companies can effectively tackle Scope 3 emissions, improve operational efficiency, and meet the growing demand for ethically responsible and sustainable products. This partnership approach is crucial for businesses aiming to thrive within planetary and societal boundaries while maintaining a competitive edge in an increasingly environmentally conscious market.”
Bart Nollen
Co-Founder
Dayrize
Our Sustainability Intelligence software can support your, and your suppliers’ sustainability and net-zero goals, reducing emissions and resource consumption by improving data sharing and collaboration.
And with full visibility into your supply chain operations, you can also provide consumers with clear and accurate information about the origins, manufacturing processes, and social/environmental impacts of the products they purchase.
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