Technology is the link to a greener supply chain
By Will Parkhouse. Will is a Director at Zeren and is based in our London office, as a member of our Commercial hiring team.
When looking at ways to decrease emissions, many businesses look first to their own practices to assess where infrastructure and operations can be leaner, greener, and more cost-effective. Introducing smart lighting, reducing/eliminating paper use, switching to renewable electricity, and shifting to remote and hybrid working, all contribute to a positive impact. However, looking to address carbon inefficiencies in the supply chain is where the most substantial improvements can be achieved.
While operational enhancements serve as a useful contributor, especially for larger offices, a study by the Carbon Disclosure Project (CDP) found that emissions stemming from the supply chain are, on average, 5.5x greater than the direct emissions of a business. Certain economic sectors experience this in multiples such as retail (11.5x), personal and household goods (19x) and food and beverages (24x). Once sectors of food, construction, fashion, FMCG, electronics, automotive, professional services, and freight combine, it accounts for more than 50% of total global emissions.
With supply chains responsible for such a significant share of carbon output, what prevents businesses from being able to assess their supply chains and identify where to drive greater efficiency? According to a report conducted by the Economist Intelligence Unit, perceived costs, lack of alignment in responsibility and sustainability frameworks across the chains, as well as wider difficulty in monitoring against a backdrop of increasing complexity, emerged as key hurdles in the opinion of senior executives.
These issues are often characterised by perceptions of short vs. long-term approaches to change and their potential impact on business. In terms of costs, the upfront spend for the implementation of new standards, processes and measurements could be off-putting, the overall growth and reputational benefit on offer, in the long run, can help to counter this concern. Achieving effective alignment when it comes to values across the many links in the supply chain is a clear challenge. The interconnected as well as interdependent nature of the chain, as well as understanding each link’s priorities and performance regarding greener operations, is also problematic, especially when it comes to countries yet to subscribe to sustainable models and practices.
Unsurprisingly, technology is poised to help with the challenge, and investment in digital routes to greener supply chains is forecast to increase to $75bn by 2030, more than double the figure from 2019. For example, ERP tools utilising public cloud providers can help centralise a range of operational, financial, and logistical information to allow executives to gain a more detailed picture of their supply chain and reduce the complexity associated with its monitoring.
For those looking to improve current operational performance, these approaches can serve first to model, and then to assess likely emissions created by individual business components to identify the best routes to improvement within a cost/benefit analysis context. Whether it’s evaluating gas consumption in heating, kilowatts in lighting or fuel used by a field sales team, the emissions footprint can be accurately projected and routes to smart improvement can be explored with greater confidence. This can also increase focus on the myriad of providers up and down-stream in the chain, from materials at one end to packaging at the other, to help identify the best partners for a more sustainable future.
The time has come to be proactive, both for the sustainability of the planet and for the commercial success of companies in the future. Consumers are demanding that businesses start delivering demonstrable improvements, governments are increasingly pushing for transparency and progress against emissions targets and future investors will want to know, as part of their evaluation process, what sustainability steps are being taken.
There’s an opportunity in achieving against the emissions challenge. 70% of consumers reported being willing to pay a 5% premium for sustainable products, a recent Totaljobs survey reported 50% of people aged 23-38 would consider quitting their current job for a more environmentally friendly opportunity, and brands can enjoy greater credibility by receiving certifications such as those from the Green Business Bureau Certification Program. While results may not improve overnight, businesses leading the charge will be best positioned to reap a range of benefits for their profiles, people, and profits, as well as leaving a greener, more efficient landscape for the next generation to build upon.
Zeren exists to empower the world’s change makers. We do this by building high-performing teams in the world’s most innovative businesses, to accelerate growth by connecting visionary leaders and ambitious talent.
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