Climate change poses an existential threat, and without urgent, drastic action the world is set to reach the point of no return. COP26 led to some progress, but governments are moving too slowly and grassroots action lacks impact. Only businesses – if willing – have both the agility and influence to lead the changes the world needs as it faces an increasingly tight deadline.
At the heart of this lies their influence over supply chains. From farm to fork, soil to soul, the supply chain enables every element of a product to get market. But traditionally a supply chain follows the polluting formula of take, make and waste.
Creating less wasteful, circular supply chains will make a big difference, even though the necessary changes will feel counter-intuitive – they often demand investment without long-term payback – and will impact businesses’ value chain.
But the cost of inaction is far greater. It’s likely that the gravity of the situation means they must go beyond net zero, with businesses having to engage in a “net positive” approach – as defined by ex-CEO of Unilever Paul Polman – and giving more than they receive.
Sustainability is fast becoming a business lifeline, too. Businesses are under pressure from employees, investors and customers who are now making active choices to support companies that take the lead – and evidence their role – in the climate crisis. Smart organisations realise they can differentiate through sustainability, and 49% of businesses already have sustainability goals for their supply chain*. Those that don’t commit will fall behind.
Action from the top down
Sustainability can no longer be confined to a paragraph in a corporate responsibility report; it needs to become a core business principle. And so, it’s a leadership problem first. Business leaders must acknowledge that their organisation is part of – and can help fix – the climate change problem.
To identify, plan and implement the necessary changes demands full visibility of the supply chain: where raw materials are extracted from, the level of emissions created and how consumers interact with – and dispose of – their products.
Technology is a crucial enabler. Tools such as Internet of Things (IoT) sensors, a flexible data management system, automation, AI and the cloud help businesses gain real-time data from the supply chain and take fast action based on the latest, most accurate information such as carbon footprint calculations. Only when armed with this information can businesses foster regenerative practices that also enhance their long-term ability to thrive.
For example, IBM’s Enterprise Intelligence Suite leverages technology to help business leaders plan for climate change, employing AI to monitor conditions, predict operational disruptions and report on environmental initiatives. This reduces the burden of reporting on procurement and operations teams.
Designing a more sustainable supply chain and addressing the standards of the Greenhouse Gas protocol requires a united front. COP26 reminded us that this conversation – and action – demands everyone’s involvement. To innovate their processes fast enough companies must work together.
This requires a shift in thinking for most leaders and businesses; supply chains typically compete. A connected, well-oiled supply chain ensures fast, efficient and more resilient operations. Unsurprisingly, from a business perspective it is advantageous to be cautious about sharing the workings of the supply chain.
However, from a sustainability point of view, collaboration is crucial; building industry alignment around extraction will save energy and money, reduce emissions and help tackle key issues such as deforestation. And technology helps to de-risk collaboration. Supported by leading-edge technology such as blockchain, companies can keep their data secure when working together
IBM is working with clients to simultaneously support traceability and secure collaboration. IBM Food Trust is built on blockchain and acts to solve the worldwide problem of food supply chains. Its smart approach improves food traceability and safety – contaminated food sources can be identified at an unprecedented rate – eliminates inefficiency and reduces waste.
Incentivise, not demonise
All too often the climate conversation can demonise organisations. This can lead to an atmosphere of inertia. To ensure businesses evolve the practices in their supply chains, they need to be encouraged and incentivised.
Climate change is a question of urgency, not perfection, and businesses need support to rise above negative voices and see the positive value of action. Government regulation needs to be constructive and come with incentives that spur on those that are reluctant to take “net positive” action.
Businesses may need to consider incentivising too, as they seek to encourage employees to engage with the sustainability benefits of technology. It’s crucial that a tech-literate company culture is created to a ensure smooth, long-lasting transition to more sustainable practices.
Supplying the planet’s future
Sustainable supply chains are set to become a business differentiator. Big players making big moves include building materials manufacturer Holcim which was one of the first companies to commit to net zero and has its emissions validated by the Science-Based Targets initiative (SBTi). These actions are putting pressure on others to change as companies seek to compete and thrive in a climate-conscious world.
If businesses react, adopt the right technology, collaborate with others and incentivise changes to their supply chains, the world may get closer to mitigating global warming. But if businesses fail to tackle their supply chains, they will hold back real progress in the climate fight – and jeopardise the planet’s survival.
working in partnership
The BRC Climate Action Roadmap is designed to help the UK Retail industry reach Net Zero by 2040.
IBM are partnering with us on Pathway 4 of the Roadmap, focused on helping retailers to source sustainably and reduce carbon emissions across their supply chains.
Find out more about how IBM can help you and your organisation.