Written by Mark Perera, CEO and Founder, Vizibl
It has recently been a great pleasure for me to give a presentation at Live Supply Chain and Supply at Tobacco Dock. Since it was my first personal event since the pandemic closed everything down, it was a real buzz to be in front of an audience of my colleagues again, and what the other speakers put in was amazing. express.
Like many of those speakers, I chose to present the significant sustainability challenges facing those of us working in the supply and supply chain in my ‘Carbon Supply Crisis’ talk.
While our focus was similar, I noticed that there was a significant difference between the advice I gave and the counseling of many others. There was a lot of talk about building a baseline, data, and complex, far – reaching frameworks before we can make real progress against our sustainability goals.
Here I would like to share the views and insights I have given to the audience at Procurement and Live Supply Chain and offer another way of enhanced supplier sustainability that incorporates a simple fact.
Indeed? We are running out of time. Going from time to time to baseline, time to tackle data, time to model the many consequences of every decision we could make, and – more importantly – time to act. Thank God, there is another way.
Scale of the problem
Uncertainty in today’s world is on an unprecedented scale. With trade wars, the invasion of Ukraine, supply chain shortages, socio – political turmoil, food shortages, rising energy prices, rising living costs, and the aftermath of the pandemic, we are suffering from an unprecedented disruption.
These crises are putting pressure on companies as they struggle to mitigate business disruption and handle the increased level of unpredictability that affects all areas of their operations. This pressure and unpredictability will only increase as the climate crisis worsens – an issue that will touch every continent, every nation, every citizen and every business.
Our behavior has already changed dramatically because of our behavior, both as individuals and as organizations, and Meteorological Office researchers have a fair chance the planet will exceed the 1.5˚C threshold in the next five years, if initially only temporarily. Without changing our behavior, we have little hope of limiting this crisis, let alone avoiding it.
We are already 23% into the 2020s, and every 5 weeks we move 1% closer to the 2030 deadline. It is clear that we are not moving fast enough to reach net zero by the end of the decade.
The importance of our value chains
As if the emissions deadline was not scary enough, business leaders face a new challenge: the growing exploration of our impact outside of our own operations. Businesses, especially large venture capitalists, are increasingly being held accountable for their end-to-end value chain emissions. No enterprise is an island, and the examination of what is going on to enable our businesses outside our own four walls is growing.
There is no basis for the scrutiny. Today, most large enterprises account for 80% of greenhouse gas emissions in the upstream supply chain. While not in direct control of these emissions, the leaders of these companies are tasked with using their power and influence to transform their supply base and to deliver supplier stakeholders on their sustainability journey.
While decisive action is needed, no organization can kill 30-40% of its suppliers if they are not compliant without further distorting themselves as a result of lost products, services and revenue. Fortunately, there is a growing awareness of the alternative: work much more closely with supplier stakeholders, especially the large emitters, to drive sustainability across the value chain of large firms.
Don’t wait for the perfect dataset
While improved alignment and stakeholder engagement of the supply base is critical, Supplier Collaboration is not easy, and there are a large number of variables to address in order to enhance the sustainability credentials of suppliers.
Organizations we speak to often cite ‘analytical paralysis’ or ‘we do not have the data’ as the reasons for their failure to take meaningful action with suppliers. Scope 3 is complex, data is difficult to obtain, aggregate and normalize, and it can be difficult to establish a strong supplier sustainability baseline as it is today.
In a world that values data – based decision – making (and as a data and technology nerd myself!), I have a desire to wait for the numbers to come in. But we do not have time to sit on our hands without fail. improvements until we can quantify our baseline.
The question we should be asking ourselves instead is: if we do not have time to wait for perfect details, how do we make the best decisions without it?
Control the controllable: focus on what you know
Improving the sustainability of suppliers, in particular the distillation of range 3 emissions into four stages, is usually the process of improving:
- Building a rough estimate of value chain emissions (note: estimate – we do not have time for perfection)
- Prioritize efforts to scale and how much you can do to influence those emissions
- Seek alignment with these providers across goals and objectives
- Collaborate selectively to find green products and solutions
As I mentioned, many organizations will stop at stage 1, convinced that they do not have much to do. But step 2 can be very helpful. I call this priority step ‘controlling the controllability’. Simply put, we need to focus on what we know.
I know, for example, that most of my emissions lie in my supply chain. I will probably have a good idea of which scope category 3 is largest (purchased goods and services), and which supply categories have the most emitters. I know who those suppliers are, I know what products or services they provide me, and I know how much I spend on them.
Focusing on what I know gives me a place to start. And it’s vital that we are do start.
Use a leading indicator
Another issue that organizations address on supplier sustainability is the second issue of data. The number of reliable emissions or sustainability scores provided by common frameworks are frequently updated, and provide only a retrospective view of performance. This is because our ultimate goals are indicators of impairment (such as reducing carbon emissions in kilotons, for example).
A key issue with time lag metrics is that if we take the wrong path, it’s too late to go back and get it right once we get the data – which could be years in the future. What we need is a dominant metric that measures our progress towards our goals and provides a reliable indicator of delay success.
Build an active collaborative relationship
The key indicator we use at Vizibl for provider sustainability success is called ‘active, collaborative relationships’, or ACRs.
We know that our ability to align our intentions and goals with suppliers, and to work closely and in partnership with them to effect change, determines success in supplier sustainability.
Active relationships are the defining characteristic of successful Supplier Collaboration. They represent relationships with productive activity such as ongoing projects, open opportunities, live initiatives, and emerging proofs of concept focused on an ultimate strategic goal set by both the buyer and the supplier. This activity is easily checked, its data is frequently updated, and successful collaborators around a strategic sustainability goal are able to predict success against that goal.
An organization with multiple active relationships that would run multiple emission reduction projects with a cohort of strategic sustainability providers, focused on aligning objectives and expected outcomes, with clear success criteria. Hence, it is also an organization that is much more likely to deliver against its delay metric.
Just get started
No matter what your environmental sustainability delay metric, whether it is net zero by 2030, we cannot fail to reduce percentages across the three emission scopes, or reduce pure plastics from your products. While it feels like we are “flying blind” without the data, three things are clear:
- We are facing unprecedented disruption as a result of climate change, and time is running out to avoid or limit its effects.
- Entering the data is time consuming and complicated, and we can’t afford to do anything while waiting for the numbers to run out.
- We can make strong decisions without the data based on what we already know, and as a result we can begin to take action to control the controllable things, today.
The best way to control the controllable things and make concrete progress against developing our common deadline is to build active, collaborative relationships with stakeholders in our supply chain.
In Uncertain Times, Control the Controllable Things –
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