Businesses will “fall behind” if they don’t immediately incorporate sustainability factors into their procurement.
Only businesses have the agility and influence to lead the changes the world needs to tackle the pressures of climate change, according to a report by the British Retail Consortium (BRC) and the International Business Machines Corporation (IBM).
The Climate Action Roadmap said businesses' unique position to tackle climate change comes from “their influence over supply chains”.
Without taking action to incorporate sustainability into their procurement strategy businesses “will fall behind”, while “smart organisations realise they can differentiate through sustainability”.
The report said: “From farm to fork, soil to soul, the supply chain enables every element of a product to get to market. But traditionally a supply chain follows the polluting formula of take, make and waste.
“Creating less wasteful, circular supply chains will make a big difference, even though the necessary changes will feel counter-intuitive – they often demand investment without long-term payback – and will impact businesses’ value chain.”
The advice is designed to help retailers reach net zero by 2040, source sustainably, and reduce carbon emissions across supply chains.
1) Action from the top down
“Sustainability can no longer be confined to a paragraph in a corporate responsibility report; it needs to become a core business principle,” the report said.
Establishing full visibility across supply chains is the first priority for procurement leaders in using supply chains to tackle ESG factors.
Procurement teams must establish where raw materials are extracted, the level of emissions created and how consumers interact with – and dispose of – products.
Technology is a key enabler in this. The report highlighted tools such as internet of things sensors, flexible data management system, automation, AI and the cloud that help businesses gain real-time data from the supply chain. This can enable fast action based on up-to-date and accurate information on things including carbon footprint calculations.
“Only when armed with this information can businesses foster regenerative practices that also enhance their long-term ability to thrive,” it said.
2) Risk-free collaboration
Tackling the climate crisis through procurement will require a “shift in thinking” from procurement teams, and may require action that feels counter-intuitive to typical business models.
The BRC and IBM said businesses must work together to innovate processes.
“Collaboration is crucial; building industry alignment around extraction will save energy and money, reduce emissions and help tackle key issues such as deforestation. And technology helps to de-risk collaboration. Supported by leading-edge technology such as blockchain, companies can keep their data secure when working together,” the report said.
3) Incentivise, not demonise
Demonising companies for a lack of progress can lead to an “atmosphere of inertia”, the BRC and IBM said. To tackle this, businesses need to be encouraged and incentivised to tackle sustainability issues within supply chains.
“Climate change is a question of urgency, not perfection, and businesses need support to rise above negative voices and see the positive value of action,” the report said. It called for greater government regulation with incentives to “spur on those that are reluctant to take 'net positive' action”.
While government incentives are important, businesses also need to incentivise staff to engage with the sustainability benefits of technology. “It’s crucial that a tech-literate company culture is created to ensure smooth, long-lasting transition to more sustainable practices,” it said.
4) Supplying the planet’s future
Sustainable supply chains are set to become a business differentiator.
The report highlighted work by building materials manufacturer Holcim, which was one of the first companies to commit to net zero. Such actions help set precedents across industries and supply chains and put pressure on companies to change as they seek to compete and thrive in a climate-conscious world.
“If businesses react, adopt the right technology, collaborate with others and incentivise changes to their supply chains, the world may get closer to mitigating global warming. But if businesses fail to tackle their supply chains, they will hold back real progress in the climate fight – and jeopardise the planet’s survival,” it said.
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