What's Happening?
RESET Carbon, a Hong Kong-based emissions reduction consultancy, has released analysis indicating that engaging key suppliers can significantly reduce Scope 3 emissions in manufacturing and retail sectors.
These emissions, which are indirect and occur across supply chains, typically account for over 80% of a company's total carbon footprint. The consultancy suggests that initial reductions of 15-30% can be achieved through collaboration on existing technologies, with larger cuts possible through energy or fuel switching. RESET Carbon emphasizes the importance of integrating emissions targets into sourcing decisions and prioritizing investments where emissions are most concentrated.
Why It's Important?
The findings from RESET Carbon highlight the critical role of supply chain management in achieving carbon reduction goals. As companies face increasing exposure to carbon pricing mechanisms, such as the EU Carbon Border Adjustment Mechanism, proactive engagement with suppliers can mitigate long-term carbon cost risks. This approach not only supports environmental sustainability but also aligns with financial strategies, as efficiency measures and onsite renewables can offer strong returns on investment. The consultancy's recommendations provide a roadmap for businesses to integrate carbon performance into their commercial strategies, potentially leading to significant environmental and economic benefits.
What's Next?
Businesses are expected to continue building programs to reduce emissions in their supplier base, leveraging industry collaborations and in-house initiatives. As companies gather supplier emissions data, the challenge will be to translate this data into actionable delivery plans. Coordinated approaches across industries can reduce duplication and create stronger incentives for suppliers to invest in low carbon solutions. The development of low carbon manufacturing pools in key sourcing regions is anticipated to support net zero sourcing strategies, providing a reliable base of lower-carbon manufacturing options.
Beyond the Headlines
The emphasis on supplier engagement for emissions reduction reflects a broader shift towards sustainable business practices. This approach not only addresses environmental concerns but also enhances supply chain resilience and competitiveness. As carbon reduction becomes integral to commercial strategy, companies may experience shifts in procurement processes and supplier relationships, potentially leading to long-term changes in industry standards and practices.
