Empowering Procurement to drive Scope 3 Decarbonization
Companies have historically concentrated on reducing their direct environmental impacts, yet decarbonization in Scope 3 is a huge challenge for most organizations. Yet the emerging reality is that stakeholders increasingly inspect the specific climate performance of a company’s suppliers.
The Problem: Despite growing awareness, regulations and market demand, many organizations lack the resources, strategies and tools to manage the climate maturity of their supply chain.
The Gap Between Awareness and Action
- The Status Quo: Even if more than 6.000 companies worldwide have set already Science-based Targets, according to CDP, only 22% of companies actively engage with their suppliers to reduce climate impacts.
- The Problem: Even companies considered to be climate pioneers often fail to influence or engage suppliers further up the supply chain to set reduction targets and implement actions, as they are missing the strategy, processes and tools to do so.
- Why it Matters: Supply chain decarbonization is not just a ‘nice-to-have’ but a critical component of corporate responsibility.
The Untapped Power of Procurement
Fact is, companies have the purchasing power to transform their upstream supply chains!
And can unlock this power to drive the strategic success of the whole company.
The barrier to entry: One major obstacle has been the lack of a harmonized framework for sustainable procurement, leading to inconsistent practices on how to structure and engage supply chains.
ISO 20400 aims to solve this problem.
ISO 20400 – Leveling the Playing Field
- What it is? ISO 20400 provides guidelines for implementing sustainability objectives through procurement.
- Standardization: It standardizes definitions and offers robust approaches, making it universally applicable to organizations of all sizes and sectors – and also for your supply chain decarbonization journey.
- Global Acceptance: Contributors from over 50 countries were involved in its development, including members of the United Nations Environment Programme.
The Multifaceted Benefits of Enhancing Sustainable Practices
- Financial Gains: Attracting investment, improving brand image, and identifying operational inefficiencies are some of the financial benefits.
- Environmental Impact: Significant reductions in greenhouse gas emissions and a decrease in the reliance on virgin materials.
- Social Responsibility: Advancements in human rights, economic engagement of vulnerable groups, and gender equity.
A Step-by-Step Guide – The Tipps of ISO 20400
Wonder how to integrate your climate targets into procurement practices?
Here’s what the ISO 20400 gives as a guideline:
- Explore the Drivers: The first step is to identify and rank the unique set of reasons for implementing sustainable procurement in your company.
- Create a Procurement Strategy: Integrate your organization’s climate objectives into the procurement policy and strategy.
- Organize the Procurement Function: Set climate targets and according priorities within the procurement function.
- Embed Priorities: Integrate these priorities into the day-to-day procurement process, from supplier selection to contract management.
Assess Your Position in the Climate Supply Chain Journey
- Beginner Stage: No actions taken yet, but considering to assess climate maturity of suppliers.
- Intermediate Stage: Climate Targets have been set, action plan is in development, and procurement as well as sustainability team work on shared agenda to develop supplier engagement program for decarbonization.
- Advanced Stage: Climate Scorecards of suppliers are fully integrated into your procurement processes, climate performance is regularly tracked, and the focus is on continual improvement.
Effective procurement practices for decarbonization can make a meaningful impact, not just on an organizational level but also on international climate targets as 50% of all emissions are created in only eight global supply chains.
This expanded blog post aims to introduce into the complexities and opportunities in sustainable procurement, without the claim to complete coverage of the topic. The focus remains on transitioning from awareness to actionable strategies, leveraging frameworks like ISO 20400 for an effective transformation journey. Empowering procurement and smart decision making.