Procurement & Science Based Target

Ensuring responsible supply chains should be key to all sourcing & procurement decisions today. We should all be concerned and care deeply about the future of our planet and its people. Sustainability must be embedded?into procurement practices in numerous ways. In this article, I'll focus on how we could reduce carbon emissions coming through the supply chain by leveraging science-based target initiatives (SBTi).

What is the Science-Based Based Target initiative?

The Science Based Targets initiative (SBTi) is a collaboration between well-regarded institutions, such as the UN and WWF. SBTi is an internationally recognized methodology for climate action, showing companies how much and how quickly they need to reduce their emissions to prevent the worst effects of climate change. Targets are assessed and validated by a team of experts.

You can find more details on their website but I think what matters for Procurement is: why is it important for companies, what is our role and how should we leverage this framework.?

Why is it important?

From a business perspective, companies have a genuine interest in minimizing their impact on the climate beyond the future of our?planet. It improves investors' confidence, employee retention & motivation, strengthens their?brands, and ultimately it will drive revenue & profitability?up.

Beyond reducing your own CO2 emissions, companies need to focus on suppliers’ emissions to engage them on the journey. Depending on your industry, your supplier will represent anywhere from 50 to 90% of your total carbon emission. The procurement role, in addition to any activities driving internal reduction, should be to incite (force?) suppliers to commit to carbon reduction. In that sense, SBTi is a useful framework to leverage to drive emissions down.?

?How do you do it?

1.????Align with the company objective and make it relevant to Procurement. Most companies today are committed to carbon emissions reductions and other sustainability?targets. If not done at the design stage when those objectives are set, link it concretely to what it means for Procurement. Try to answer the question: "What is needed from a Supply chain perspective?"

?2.????Estimate what is the carbon emission link to each supplier to?define a baseline. If you cannot get information directly from your suppliers, you can estimate it. Some firms are providing industry estimates and some specific information that could help you calculate it. It doesn't need to be an exact science. The idea is to define KPIs you can track.

?3.????Measure & evaluate your suppliers. One way is to give each supplier a CO2 level between 0-7. Level 0 means that you have no information. Level 1-4 is based on the supplier’s response. The data source for levels 5-7 is the SBTi homepage.?The emission baseline is calculated by multiplying the supplier spend with a category emission factor.

4.????Define the KPI?you should be following. Several ways to do this. I am sharing one below which is working well and allows us to track progress vs. SBTi:

5.??Define objectives and include KPI in your monthly reporting.

6.????Pull together?guiding material for your procurement team?to help suppliers get to SBTi levels 6 & 7. Focus your activities on larger suppliers.

7.????Update all your documentation & processes to include environmental parameters (due diligence, audit, quality assessment, RFx,...)

8.????Communicate internally & externally. Your suppliers, your team, and your stakeholders need to?hear the commitment, the actions, and the progress.

9.????Get into action:?Work actively with your suppliers to get them to commit to SBTi. The lead time for a company from committing to having the SBT set can be up to two years, which means that you must work proactively with suppliers on all levels.?Make sure to cover climate change mitigation on the agenda in the supplier dialogues and meetings. Let the supplier know that this is an important area. Executive QBR can also be a good place to have this covered. Also, remember to provide feedback to suppliers losing business or not awarded new business due to "non-satisfactory environmental"?criteria.

?The above is just a glimpse into what SBTi is and what all procurement can be doing. The intent is to give a kick start to some, a reminder to others, and hope that you will go, read more and act.?We all have a stake in building a better future !