A report from the Bank for International Settlements reveals that, in most cases, supply chains are becoming more complex and mutually dependent than ever. They reported an “increase in the indirect cross-country links, as new firm nodes interpose themselves into existing supply chains.”
This increase in complexity has major implications for emissions reduction and sustainability reporting. It’s particularly true for large businesses facing pressure from both financial markets and regulators for mandatory Scope 3 emissions reporting.
Any additional links in the supply chain will make tracking Scope 3 emissions much more complicated. Improved collaboration and transparency are required between businesses at every stage.
In this year’s BSI Net Zero Barometer reporting on UK business’ net zero progress, tracking supply chain emissions emerged as a major obstacle.
Currently, only 18% of businesses surveyed are measuring Scope 3 emissions as fully as possible. Since these can represent up to 90% of a company’s total Scope 1, 2 and 3 emissions, improved tracking offers an untapped route for emissions reduction.
For the recently released fourth edition of the Net Zero Barometer, we surveyed over 1,000 key decision-makers from a range of UK based businesses. While 61% have made progress in reducing emissions in their supply chain, it still represents a major challenge.
The survey reveals that larger firms are more likely to have successfully reduced emissions across the supply chain than smaller firms (89% vs 69% respectively). However, there is recognition that further reductions rely on greater levels of cooperation between businesses across the chain, large and small.
Responses to the survey also revealed sector-specific challenges. In the mining, quarrying and utilities sector, for example, 43% of businesses cited difficulties in finding suppliers with net zero credentials as part of their supply chain. It is also a major problem in retail, where 33% of organizations cited difficulty in finding suppliers with net zero credentials as the biggest obstacle to emissions reduction.
There is an opportunity for businesses of all sizes to work together towards net zero. Large firms can help microbusinesses to do more (as part of their Scope 3 commitments), and microbusinesses can raise their game to win work from large firms (and help them succeed with their Scope 3 reductions).
Using common standards, methodologies and frameworks will only help strengthen accountability and transparency for businesses as they communicate their actions to their shareholders, investors and customers.
Standards give businesses a common framework and shared language for discussing sustainability issues. As Todd Redwood, BSI’s Global Managing Director – Consumer, Retail and Food notes in the report: “Without globally agreed standards on what good looks like, there’s a challenge for retailers in identifying the source of every element of the products they sell.”
This shared language can also help to align goals and objectives for businesses across the supply chain, while also increasing trust and transparency between businesses working together on sustainability. They can also provide clear guidance for action. This is particularly important for small businesses that don’t necessarily have the compliance and reporting teams employed by bigger organizations.
Making collaboration work
BS ISO 44004 Collaborative Business Relationship Management – this international standard promotes progressive collaboration between large corporations and small businesses. It can play an important role in developing the collaboration necessary for supply chain sustainability.
Net zero transition guidelines for SMEs
BSI Flex 3030 Net Zero Transition Plans – with small businesses particularly in mind, this standard has been developed to give nationally agreed guidance on how to plan an effective net zero transition. For larger businesses, it can provide confidence that SMEs in their value chains are taking action.
Making verifiable emissions claims
BS ISO 14068-1:2023 is a new international standard setting out strong principles and detailed and verifiable requirements on quantification and reduction or removal of GHG emissions. Users gain clear, best practice guidance that will allow them to make verifiable claims of carbon or climate neutrality.
Note: There will be a period of 24 months from the date of publication of ISO 14068-1:2023 before the PAS 2060:2014 document, which it supersedes, will be withdrawn. This allows users to address changes that may be needed to meet the revised requirements detailed in the new BS ISO 14068-1:2023 standard.
Understanding the carbon footprint of products
BS ISO 14067 provides companies with a comprehensive methodology for calculating the carbon footprint of a product.
As global supply chains face ongoing complexity and disruption, meeting Scope 3 emissions reporting targets will require greater transparency and collaboration between businesses at every stage of the chain, from largest to smallest.
Standards can provide the shared language, trust, transparency and approach required to make a successful, mutually beneficial, net zero transition.
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