Decarbonizing the supply chain - 5 steps for successful collaboration with suppliers

Achieving climate targets is a challenge that we can only overcome together. This is particularly true for companies, as up to 90% of their emissions are usually generated in the supply chain. It is therefore particularly important to establish successful cooperation with suppliers in order to achieve joint climate targets.

If companies actively involve their suppliers in their own sustainability strategy, emissions can be reduced not only internally, but on a much larger scale - along the entire value chain. In addition, supply chains can become more resilient by overcoming climate-related risks and building trusting relationships. Accordingly, more and more companies are asking themselves the question: How can we get all our suppliers on board when it comes to effective reduction measures?

Below we outline 5 key steps that are important for building strong business partnerships and an effective supplier collaboration network.

5 steps to successful supplier cooperation:

1. Create transparency

Which of your suppliers have already set climate targets and which are already at an advanced stage in implementing them? Which of your suppliers need support?

To work successfully with suppliers, a company must be able to answer these questions and build a basic understanding of the climate maturity of its suppliers. In this way, companies can not only identify the most important suppliers, but also recognize where the majority of emissions within the supply chain originate.

To gain a comprehensive overview, companies must first establish a consistent and scalable process for collecting comparable data on the holistic climate maturity of suppliers. To ensure comparability and quality standards, the data collected should be aligned with international climate reporting frameworks and cover governance, strategy, risk, metrics and KPIs. Data-driven tools, such as the CLIMATE Performance Assessment, help with the collection and management of primary data.

2. Ensure the participation of suppliers

To ensure the participation of suppliers, a trusting and transparent relationship must be established. It is therefore essential that a company discloses how the data collection process works and how supplier data is used.

In addition, successful collaboration with suppliers means creating shared value that drives and motivates suppliers to align with climate goals and transform entire business models. First of all, it is important to develop a common understanding of what it means to do business sustainably.It is the company's task to communicate the importance of climate-relevant business practices and opportunities for the suppliers themselves.

Important: A company should always communicate transparently where it stands and set corresponding expectations for suppliers.

3. Set up climate data management

Once the data has been collected, it is crucial how the suppliers' climate-relevant data is processed and managed. First of all, it is important to ensure that the data is accessible to all suppliers involved - because collaboration on decarbonization is not a one-way street, but a path of cooperation with mutual benefits and shared learning processes. The basis for this is to enable an active flow of communication in both directions, where both expectations and concerns can be communicated on both sides.

In addition, the data must be analyzed accordingly in order to identify both risk areas and opportunities for climate action.

Only if appropriate conclusions and follow-up measures result from the findings can the climate transformation be successfully driven forward.

4. Cooperation and development

The most important foundation stone has been laid with functional climate data management. Truly sustainable success now requires communication at eye level and long-term cooperation. Simply dictating guidelines does not work. Instead, a trusting, profitable and mutual exchange must take place in order to jointly reduce climate performance.

Now is the time to invest! It is important to understand what suppliers need in order to meet the company's expectations and guidelines for climate-relevant production. Investing in relationships with suppliers means working together to develop solutions that meet the interests and support the needs of all stakeholders. By working together on planning and capacity management, as well as improving waste and resource management, companies enable their key suppliers to redesign their processes and work more efficiently. This enables them to make effective progress in effectively reducing CO2 and move closer to their climate targets.

5. Continuous monitoring and optimization

What actually works and what measures can we optimize? Once a company has successfully initiated cooperation with suppliers, it is important to continuously monitor the ongoing measures. This makes initial successes tangible. In addition, processes can be adapted and further measures developed if necessary.

First of all, it is important to check the effectiveness of the improvement measures using predefined indicators. It is helpful to take the climate targets set as a starting point and regularly measure the upstream and downstream climate impacts. This allows the effectiveness of various measures to be reflected. This not only helps to recognize best practices and effective solutions, but also to identify new opportunities for improvement. During the process, it is important to constantly increase the targets in order to continue to challenge the company itself and its suppliers.

Challenges in working with suppliers

Nevertheless, there are several factors that make working with suppliers a challenge for many companies. Investing in long-term and strong partnerships requires time and effort and a fundamentally different way of thinking about purchasing processes. In addition, many companies still lack the resources and tools to measure and process their suppliers' data. This still prevents them from identifying the CO2 hotspots along their supply chains.

We have set up the Climate Intelligence Platform to make it easier for companies to collaborate with their suppliers. It enables companies to collect climate-related data and improve collaboration along the supply chain for efficient decarbonization.

Would you like to find out more about the data-based software tool for working with suppliers? Book a demo today and find out how climate data can be collected and validated and how your company can integrate its suppliers into its own sustainability strategy.