Chief supply chain officers (CSCOs) are under “significant” pressure to address emissions as organisations look to reduce their carbon footprint, Gartner has warned.
Gartner analysts said one of the main takeaways from the COP26 summit was that supply chains will come under scrutiny as they account for scope three greenhouse gas emissions.
In a report Gartner said as national commitments so far could not keep global warming within the 1.5C warming target, the focus would be on businesses to reduce emissions.
“The spotlight on chief supply chain officers (CSCOs) is significant, because their operations account for the majority of emissions in the value chain,” Garner said. “CSCOs need to double down on their efforts to reduce emissions.”
The report said loans, investments and other financing would be increasingly linked to an organisation’s sustainability performance, which would require stronger governance and reporting.
It noted few companies reported in detail on carbon emissions from the value chain, and one of the challenges was obtaining the visibility to correctly calculate and allocate greenhouse gas emissions.
“Enterprises are experts at understanding their own emissions (scope one and two),” Gartner said. “However, collecting scope three data is problematic as you need visibility into data through multiple tiers of the supply chain.”
The report said power dynamics could make it difficult to drive improvements when working with “mega-vendors”, but some supply chain leaders were working on collaborative strategies to do this.
Analysts noted the increasing use of technology for data collection but added: “Our recommendation is not to start by trying to collect all scope three data; focus instead on where the enterprise can have maximum impact and bring about positive change.”
The proportion of the world’s 2,000 largest companies with net zero targets has risen from 20% to 33% in the last nine months. Gartner said the number of companies setting 1.5C-aligned science-based targets was encouraging but said the credibility of these pledges was under scrutiny.
“All that is to say that the ambition is there, but action is key, and CSCOs will be critical in delivering the actions that turn pledges into reduced emissions,” Gartner said.
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