Going beyond carbon: sustainable value chains

Baringa recently hosted the first in a series of Industry Roundtable events on sustainability: “Beyond Carbon: Sustainable Value Chains”.

The event took place at #TheConduit on the evening of Thursday 2nd February 2023, bringing together businesses from across the Consumer Products, Retail, Telecommunications, Media and Pharmaceutical Industries.

We opened with topical insights from Maureen O’Shea, a Partner in Supply Chain and Sustainability at Baringa, on the critical role of business in reaching Net Zero emissions by 2050. She brought to life the pace of change in the financial markets, shifting customer behaviours and emerging regulation that makes “being ready” for sustainability more important now than ever before.

How do we tackle Scope 3 emissions?

We’re all familiar with the stark headlines: worldwide emissions must fall by 45% by 2030 to keep global temperature rise under 1.5°c.^[1] Yet, only one in three of the largest publicly traded companies have net zero targets. And of these, over half do not yet meet minimum reporting standards or have clearly defined strategies or roadmaps.

As businesses move from intent to action, the Value Chain – which can account for over 90% of emissions in many consumer-facing businesses – will play a key role in the corporate decarbonisation agenda.

• ~64% of TMT emissions come from the supply chain ^[2]
• ~71% of healthcare emissions come from the supply chain ^[3]
• ~93% of retail emissions come from the supply chain ^[4]

The four key issues

So why is there still a gap between intent and action?

1. Lack of visibility

To date, supply chains have tended to lag behind other divisions in decarbonising because their operations require collaboration with many partners and yet their visibility into those moving parts can be limited. As we’ve globalised, Supply Chains have become complex, dispersed, opaque and inflexible. This can lead to uncertainty over who we’re doing business with.

2. Suppliers are outside of direct control

Change requires multi-actor collaboration. Unlike tackling Scope 1 and 2, the emissions of the Supply Chain are outside of the direct control of the business. To improve their own Scope 3 footprint, the demand side needs to work with suppliers and encourage the transition towards sustainable sourcing models.

3. Lack of available, accurate, accessible data

Suppliers are likely to be at different stages of their decarbonisation journey. This makes acquiring a standard set of data to measure Scope 3 near impossible. Even if the data is received, in many cases emissions factors are high-level estimates based on industry benchmarks.

4. Economics

Twenty years ago procurement looked at price only. Today, the total value equation is routinely scrutinised – the cost, the quality, the lead time, the payment terms. Those companies that are making a difference are moving values like carbon emissions into these essential scoring criteria.

The bottom line

But Sustainability is about more than carbon – it encompasses DE&I, social mobility, human rights, board composition, fair taxes, biodiversity, resource depletion and more. Being ready for sustainability is not a nice to have – it’s a business imperative. Sustainable performance impacts reputational advantage, predictable cashflow, cost efficiency, resilience against changes in regulation, and operational efficiency. We’re asking Procurement and Supply Chain leads four questions:

1. Are you prepared for emerging regulation and increasing pressure from stakeholders?
2. Do you have a robust baseline for where and what activities are creating an impact?
3. Is Sustainability integrated into your Procurement Category strategies?
4. Is Sustainability a core part of your procurement policies, processes, decision making and contract management?

Over to our panel

The event then turned to our panel of experts who shared their perspectives on the strategies, scandals, and net zero heroes in business and government,

• Lucy Carver, Independent Sustainability and ESG Consultant and Advisor
• Carrie Lomas, CEO of two ‘purpose with profit’ companies: EYFSHome and Brand Conscience;
• Benet Northcote, Trustee at Green Alliance, formerly Director of Corporate Responsibility at the John Lewis Partnership.

Are businesses doing enough to meet Net Zero carbon emissions by 2050?

With America, China and the EU all introducing legislation that will fund a low carbon market and new green business models, the economy is set to radically alter. Benet explained the profound effect this shift will have on businesses.

Lucy shared her perspectives on the discrepancy between pledges and action. She highlighted the importance of fully integrating Sustainability into business as usual – policies, processes, skills, governance –to accelerate the transition to Net Zero.

What’s the next big scandal?

Lucy said that scandal is just another name for scrutiny - and it’s here to stay. In many cases, the price of scandal is being baked into plans and roadmaps. Pressure and scandals are important, but there must be another reason to engage with sustainability.

Benet believed that offsetting and carbon markets are a scandal waiting to happen, while Carrie took the view that openness and humility around ethical disruption and off-track roadmaps will drive positive action at an industry level.

Scandals breed news and – crucially - action. Opportunities and solutions also carry risk. Being honest and transparent is the only way to make progress at the pace and scale needed.

It’s a multi-actor system - so who’s going to lead? 

Sustainability is a naturally collaborative discipline. Politicians, customers, suppliers and corporations need to do things differently. Our leading businesses will create space for everybody else to follow.

We need an intersection between the economies who really care about sustainability in its broadest sense. When businesses disrupt the system, governance has to catch up.

A time of hope

February 2^nd also marked Imbolc, the mid-point between the winter solstice and the spring equinox. Still celebrated in Ireland as Saint Brigid’s Day, it’s a time of hope, optimism, and change.

[1]  Net Zero Coalition | United Nations

[2] https://www.oliverwyman.com/our-expertise/insights/2021/may/next-level-of-emission.html

[3] https://www.mygreenlab.org/uploads/2/1/9/4/21945752/the_carbon_impact_of_biotech___pharma-_final.pdf

[4] https://aws.amazon.com/blogs/industries/data-architectures-to-track-scope-3-emissions-for-retailers/