5 principles for engaging your supply chain

With the climate clock ticking, reducing Scope 3 emissions - all other indirect sources of emissions that are within a company's value chain - has become a top priority for companies around the world, especially those that have committed to net zero. It’s a challenging problem to solve, given the complexity of global supply chain networks that are the backbone of modern companies. With Scope 3 potentially representing over 90% of a company’s carbon footprint, already it becomes clear to see why this is a much harder area to tackle.?

Businesses are now entering an era of collaboration to reduce their Scope 3 carbon emissions by identifying new solutions, enhancing knowledge, sharing best practices, and driving collective action at systemic and industry levels.??

A collaborative mindset will allow you to accelerate the progress of existing partnerships and create new ones where gaps need to be filled. Having visibility into your supplier base is crucial for your business to take proactive measures:?

• It allows you to make informed choices about how and where to allocate your resources to deliver maximum impact?
• It empowers your supply chain officers and procurement leaders to implement responsible procurement practices throughout your organisation, leading to significant reductions in upstream Scope 3 emissions.??
• It uncovers various opportunities for your company to enhance brand value, extending beyond emission reductions to creating an efficient, resilient, cost-effective, and customer-centric supply chain network.?

With the right combination of visibility, actions, and collaboration, your business can reach your sustainability goals and accelerate the decarbonisation of your supply chain. Here are 5 principles for engaging your supply chain:?

Define your baseline

Collecting data on current emissions from the supply chain serves as a foundation for measuring progress. It provides a starting point for identifying emission hotspots and setting realistic reduction targets. Without accurate data, it becomes challenging to track progress and evaluate the effectiveness of emission reduction initiatives.?

During this process, supplier trust is a significant factor to consider. Often, suppliers are unsure about how their data will be used and may worry about potential penalties or loss of business if their responses are not deemed satisfactory. It is vital for your team to be open, transparent, and communicate that data collection is part of an ongoing process and journey, benefiting both your company and your suppliers. By understanding their baseline, you can develop strategies to provide support. This approach is crucial for building meaningful and long-term relationships with your suppliers.?

Understand your suppliers: map and segment

Supplier mapping allows you to understand and target suppliers who have the biggest influence on your supply chain impact and identify what they need to do differently. By identifying and understanding the various suppliers in your value chain, your business can effectively prioritise your engagement efforts and develop targeted strategies for emission reductions.??

One approach does not fit all. A common challenge is not fully understanding the maturity, knowledge, and current activities of your suppliers. By understanding your suppliers’ capabilities, opportunities, and motivations, you will be in a much better position to set realistic and achievable goals:?

• Capability: Do your suppliers have the knowledge, skills and abilities to reduce their carbon emissions? If the capability is low, organisations like Planet Mark can provide training, workshops, and resources to enhance suppliers' capability to measure, manage, and reduce their carbon footprint effectively. When your suppliers have greater capacity, you can learn from their expertise and identify potential areas for collaboration or joint investments in reduction projects.?

• Opportunity: The processes that guide our decisions and behaviours are influenced by planning, beliefs, desires, and incentives. You may consider creating opportunities for your clients and suppliers by implementing sustainable procurement policies, offering incentives for emissions reduction, and integrating environmental considerations into supplier selection criteria. GLP, a global market leader in logistics real estate offers complimentary Planet Mark Property Certification to its tenants for 2 years to drive down carbon emissions and encourage its customers to work more closely with GLP on their journey to net zero. By reducing barriers, aligning incentives, and fostering a supportive environment, you can empower your suppliers to embrace sustainable practices.?

• Motivation: Factors that make action and behaviours possible i.e., ease, accessibility and availability. It is important to understand your suppliers' motivations, including their attitudes, values, and perceived benefits, to create effective engagement strategies. This may involve highlighting the economic benefits of emissions reduction, showcasing leadership opportunities, or appealing to suppliers' commitment to corporate social responsibility. For example, implementing anonymized supplier benchmarking enables suppliers to assess their performance relative to their peers or competitors. This process can serve as a source of motivation for your suppliers, as they can see where they stand and recognise areas for improvement. Armed with this information, they can approach their leadership and highlight the importance of enhancing their performance.?

Foster collaboration and support suppliers

Once you have a clear understanding of the maturity level and context of your suppliers, as well as the interventions that will make the most significant impact, you can develop a well-informed engagement programme to invite your suppliers to join you on this journey. It’s important to emphasise that this is a shared journey. It’s not only about your company's progress but also about collectively working toward a more resilient future. By fostering a sense of shared responsibility and building strong partnerships, you can collaborate with your suppliers to achieve shared sustainability goals.?

Get the conversation started?

Initiating the discussion about climate with suppliers will provide an opportunity to directly communicate expectations. It’s important that you clearly articulate your commitment to reducing Scope 3 emissions. By setting ambitious targets and publicly sharing your sustainability goals, you can send a strong message to suppliers about the importance of emission reduction. This can be done through sustainability reports, public announcement events, or by updating the supplier code of conduct to include specific emission reduction requirements.??

Procurement policies?

Sustainable procurement must be purposely done. Re-think your procurement policies and procedures and re-write them with sustainability at their core. This way you will ensure the system is robust, helping integrate corporate responsibility at the governance level. Include such requirements in the evaluation of new suppliers and renewal of contracts with existing suppliers and evaluate how to integrate climate action into the existing supplier base.?

Ask your procurement team to consider applying such requirements to existing contacts where applicable, as part of the dialogue with suppliers. Your procurement/sourcing team has a fundamental role in making your supplier strategy effective. For this reason, these teams must be trained on your company’s decarbonisation strategy, and the role they can play in their relationship with suppliers. Their buy-in is fundamental.?

Resources?

Provide tools and resources that suppliers with different degrees of maturity on climate can leverage to commit and take action towards halving their emissions. While some suppliers might be on track already to halve their emissions, others might not know where to start. Link suppliers to useful public resources and offer ad-hoc support where needed. For example, through Planet Mark, Fora Spaces provided its members with Carbon Clinics, 1-1 meetings with experts to help increase the action for those suppliers with a lower level of maturity in their climate journey.?

Regular communication

Regular communication and engagement are key to maintaining momentum and ensuring continuous progress. Ongoing communication with your suppliers has three key objectives:?

• Reminding suppliers about the actions they can take to reduce their environmental impact.?
• Raising awareness and educating suppliers about your company's vision and goals?
• Inspiring action and encouraging behavioural change among suppliers.?

Establish processes for ongoing communication, such as periodic meetings, webinars, or forums dedicated to sustainability. These platforms allow for the exchange of information, updates on progress, and the sharing of success stories. They also provide an opportunity to address any challenges or barriers faced by your suppliers and explore potential solutions together.?

Establish a transparent and annual tracking process

Define a clear process to track supplier climate performance at least annually, leveraging both disclosures requested from suppliers and publicly reported indicators. This provides insights into how targeted efforts with select suppliers contribute to your wider supply chain climate targets. Note that suppliers' reporting will cover their entire organisation's scope of emissions, not just those directly associated with the production of the company's products. This comprehensive approach ensures a holistic understanding of suppliers' climate performance. This progress can be leveraged to indicate the next steps and dialogue needed with suppliers, fostering transparency and collaboration.?

Are you ready to take the next step towards achieving net zero carbon emissions in your supply chain? Join our community at Planet Mark, where you'll connect with a diverse network of businesses working to decarbonise. With our Supplier Engagement Programme, you can access supplier emissions data, facilitate important conversations, and build capacity across your supply chain to reach net zero carbon emissions.? Contact us now to learn more about our programme and start your journey towards net zero.?

Click?here to receive our newsletter in your inbox.