Supply Chain Decarbonization

As someone who has worked in climate for about a decade, I’ve now been around long enough to both feel optimistic about how far we’ve come and a little frustrated about how far we have to go. 

One thing I have been impressed with is how in the last few years, companies as diverse as Johnson & Johnson, General Motors, Microsoft, and others have made commitments to cutting the footprint of their supply chain. According to the good people at the Science Based Targets Initiative (SBTi), over 500 corporations around the globe had set their goals by the end of last year. It fills me with optimism to see such smart and bold commitments.

But I have a memory about this now and am disappointed to see that corporate climate leaders have not yet learned some of the lessons they need from previous efforts to decarbonize – specifically the experience around Walmart’s Project Gigaton. Starting in 2017, Walmart made a very bold decision for the time to cut one billion metric tons of carbon dioxide from their supply chain by 2030. To their credit, they achieved this goal six years early. 

However, Walmart is only partway home. 98% of Walmart’s emissions come from its Scope 3 value chain emissions, which means that based upon its reported Scope 1 & 2 emissions of 14.62 million metric tons of carbon dioxide (MMT CO2e), its Scope 3 footprint is somewhere around 716 MMT CO2e. To be in line with the Paris goals of a 50% reduction by 2030, this would require approximately 50 MMT CO2e of supply chain reductions per year for the rest of the decade. This would seem to be achievable, based upon their current track record. 

So why am I disappointed?

For Walmart and every other corporation interested in decarbonization, they will need to learn the right lessons from this success. Walmart is famous for its work on squeezing efficiencies from its supply chain, generating integrated reporting that filters information to the top and allows Walmart to make data informed decisions on who, where, and when to buy, sell, or ship goods. They leverage this system as part of the Project Gigaton, bragging about having 5,900 suppliers sign up for the challenge. 

But that means that Walmart after seven years of effort has only been able to get buy-in from under 6% of their 100,000+ suppliers. That small percentage would imply that Walmart has only engaged its top tiers of suppliers.  This is a critical risk to continuing its decarbonization success and suggests something else needs to be done.

Top tier suppliers are typically large, often public companies with their own public sustainability teams and public goals. They have the staff and resources to strive to achieve on climate. For everyone else, they’re smaller and instead of sustainability teams, they might have someone who manages sustainability along with something else like operations, human resources, or compliance. Bluntly, they care about climate but do not have the background or resources to do much about it. So, while it would help them to be able to report their emissions reductions goals to Walmart (and you), they can’t. 

If you’re like most people in corporate sustainability, you might just assume that there is nothing to be done. But if you assume that, you won’t be able to achieve your goals, which can be incredibly frustrating and dispiriting. 

So, what do you do? 

You have to go beyond goal setting and requiring supplier reporting and green business certification programs and move into truly working with your supplier by empowering them to make better decisions. There are millions of climate related decisions happening in your supply chain being made by people that have no idea what a Scope 3 emission is but deeply care about climate and keeping you as a customer. Any solution they use will have to be designed, from the ground up, with them in mind. You have to move from a top-down mindset and change to a bottom-up mindset. 

Thankfully, this is something that net zero software can help with and even make the top-down decision making more functional. Every company in your supply chain, calculating its own footprint, and linked to every other company in your chain, will allow for real, actionable, and accurate emissions accounting data to flow to the top. It will forever abandon the mindset of the educated guesses of life cycle analyses. Your suppliers will have the ability to purchase carbon offsets and you’ll have visibility into these carbon offset purchases and what emissions have been offset. You will accelerate your decarbonization as your army of suppliers moves forward without needing the general to give a speech.

There are other climate tech companies, but Aclymate is the only one built from the ground up with this problem in mind. If you’re interested in starting with Aclymate – the simplest, most affordable climate solution for SMBs in the United States – I’d love to show you how. 

You can book a demo with me here. 

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