With upstream supply chain greenhouse gases normally making up the majority of retailer emissions (70% or more of total food retail emissions, for example), achieving net zero scope 3 emissions will require engagement with suppliers and support for them on their net zero journeys. In effect, a net zero retail industry can only be achieved by the establishment of net zero product supply chains.
The decarbonisation approaches proposed for retailers in this roadmap can generally be applied on a similar basis by suppliers: for example, commitments to measure and report greenhouse gases, and programmes by suppliers to tackle their operational (scope 1 & 2) emissions, as well as their scope 3 emissions. Indeed, the notion of decarbonisation responsibility tracking back up supply chains is critical.
Retailers can encourage the embedding of greenhouse gas data in their suppliers’ operations through supplier engagement programmes, and through requesting greenhouse gas data from top suppliers. Retailers can also encourage their suppliers to embed carbon management by requesting major suppliers to commit to net zero and/or science-based targets themselves.
A key question, then, is how retailers can encourage their suppliers to progress and accelerate decarbonisation efforts. Options include:
- Greenhouse gas-related procurement standards and principles – can be achieved by incorporating climate performance as core criteria in procurement assessments.
- Supplier incentives – offers of long-term buying contracts can be used as an incentive for suppliers to begin longer-term climate projects, for example.
- Climate funds – Money raised from internal carbon prices (see following section) can be used to subsidise suppliers’ capital investments, such as renewable energy installations.
- Ranked supplier programmes/scorecards – collecting climate data from multiple suppliers and scoring them to encourage positive action.
- Increased data collection and encouragement of target adoption – The process of measuring emissions and setting targets itself can often drive reductions among suppliers.
- Knowledge-sharing – Sharing of environmental best practices and resources across the industry and across suppliers can be a useful mechanism for change (for example the SME Climate Hub).
As there is often a high degree of supplier overlap between retailers, the greenhouse gas data collection process can be facilitated by ensuring that data requests from different retailers across the industry are harmonised and consistent, to ensure that the reporting process is streamlined for suppliers. Work is underway by agencies including CDP and WRAP to facilitate consistency and minimise duplication of effort.
It is important to note that tier 1 supplier data for retailers will vary, dependent on supplier type. Agricultural emissions for example are generally harder to quantify than manufacturing emissions, as the sources are wider-ranging and more complex than simple electricity and gas inputs (e.g. indirect N2O emissions from fertiliser application). Work is being done by organisations such as the Cool Farm Alliance to more easily estimate on-farm emissions.