Climate Management: A Scalable Solution for Your Supply Chain
Climate management goes well beyond compliance and rising market requirements, decion makers aim to take responsibility across their entire supply chain to accelerate decarbonization.
Companies play an essential role in climate transformation. Acknowledging this, more than 6.000 have set worldwide already science-based targets to reduce greenhouse gas emissions (GHG) along the whole value chain to reach net-zero by latest 2050.
An organizations’ resilience in the upcoming low-carbon economy is strongly connected to its capability to reduce emissions and the climate transformation of its decision making.
However, only 13% of organizations say today that they have adopted a climate management solution that allows them to scale their decarbonization efforts along the supply chain (Research Capgemini, 2022).
Meanwhile decision makers agree that climate management ensures business resilience and drives innovation – while improving climate performance and unlocking value along the supply chain.
Most CxOs (61%) said climate change will have a high or very high impact on their organization’s strategy and operations over the next three years (Research Deloitte, 2023).
With consumer, regulatory and stakeholder pressures increasing, climate management is no longer an option. It is a must have.
Multi-dimensional Approach to Climate Management
End-to-end climate management is a multi-dimensional approach that collects climate-relevant data, not only CO2 numbers, to analyse, track and report the holistic climate performance of a company, its reduction efforts and the status of net-zero pathways across the entire supply chain. This requires to overcome the currently fragmented and manual challenge of data collection and operation.
International Challenge of Climate Management across Supply Chains
- 92% of organizations plan to achieve their net zero targets by 2040.
- But 45% aren’t using data to support their net zero ambitions. They use climate data only for mandatory reporting and don’t embed it in decision-making.
- Only 13% have adopted a solution that allows them to scale their decarbonization efforts and to upskilling their suppliers on climate management.
The complexity increases exponentially the more suppliers are involved – and therefore countries, regulations and market requirements. For example, the US there focuses on the SEC’s Climate Disclosure Policy, the EU on Climate-related Financial Disclosures (TCFD) and the Corporate Sustainability Reporting Directive (CSRD) (Climate Regulation Landscape 2023). The upcoming EU’s Corporate Sustainability Due Diligence Directive (CSDDD) will even effect multi-national companies outside of the EU. They must report if their supply chain alines with the international 1,5°C climate target of the Paris Agreement (Climate Impact of CSDDD). This fast changing regulation landscape constantly reinforces and rises the importance of end-to-end climate management.
Data-Driven Decisions to Collaborate on Decarbonization
In the past, climate management and supply chain decarbonization were often separated into the responsibility of sustainability and procurement department. Top-level decision makers had to create internal company solutions and solve a certain part of the challenge for the entire company. This way, chief sustainability officers, chief procurement leaders or chief operating officers were working in worst case against each other, but certainly not together. Climate leaders therefore need to ensure that their entire team is aligned on the same agenda, despite departments having sub goals and individual needs.
Each department often has its own set of climate performance metrics – such as supplier climate targets, reduce efforts taken and availability of emission data – but rarely communicate those transparently across functions. All stakeholders must be on the same page of what the company’s net-zero objective is to ensure they are taking smart, data-driven decisions for decarbonization.
AI-Powered Decarbonization Engine to Reach Scope 3 Targets
While most companies have already set climate targets, most lack a consistent roadmap to implement actions along the supply chain. On their mission to reach net-zero, they face serval challenges:
- Supply Chain Decarbonization Strategy: Climate data is not embedded into decision-making.
- Missing Data Sources and Scalability: It’s hard to manually gather supplier specific climate data from multiple sources – such as excel, email, websites and public reports.
- Lack of Traceability and Audit-read Data: Tools are lacking to gather climate data from fragmented sources and aggregate them to high quality data sets, allowing for smart climate choices.
To automate, accelerate and ease this process, The Climate Choice empowers its customer’s decarbonization journey with the Climate Intelligence Platform. The AI-driven platform supports decision makers to drive gather climate-relevant supplier data, create individual climate scorecards to benchmark with peers and accelerate cross-value chain collaboration.
We believe data is only valuable, if we use it! Our work is all about empowering collaboration on our shared vision: A world in which businesses strive as they build a low carbon economy that navigates well within the planetary boundaries.