Leading organisations are turning to reducing supply chain emissions to help accelerate decarbonisation and drive ESG policies, the World Economic Forum (WEF) has found.
Research from the WEF has shown the innovation strategies from four major companies from the Alliance of CEO Climate Leaders – Royal Philips, IKEA, Unilever and ZF.
One of the key points in speeding up progress are collaboration and executives dedicated to ESG policies and achieving net zero.
“When organisations focus on the emissions beyond their direct control, they can accelerate decarbonization throughout the economy,” the WEF says.
“They might make it easier for customers to buy green, for example, or engage their suppliers to take action in regions where government has not yet brought in tough climate legislation.”
The Alliance of CEO Climate Leaders are a CEO-led community from world leading companies committed to accelerating the net zero transition.
Research from the Alliance found 80% of the total 4.3Gt emissions footprint from these businesses is produced by their supply chains (known as Scope 3 emissions). This is higher than Scope 1, emissions directly generated by a company and Scope 2, indirect emissions associated with the purchase of utility costs.
A survey of Alliance members revealed issues on progress relate to:
- Policy gaps are delaying the scaling of green solutions
- Difficulties with reporting and transparency due to a lack of standards and capabilities for collecting data and calculation complexities
- Limited availability of scaled solutions, driven by technical limitations and / or financing difficulties
How the leading companies are progressing
Royal Philips and Ingka Group, the largest IKEA retailer in the IKEA franchise, are developing closed loop, circular systems, the WEF says.
ZF and Unilever are leveraging innovation and engaging with their suppliers in a path to net zero.
Royal Philips is aiming to generate 25% of its revenue from circular products, services and solutions by 2025.
Closer to home here in Australia, Australia post has committed to working closer with suppliers in its 2025 Sustainability Roadmap Delivering a Better Tomorrow. The Roadmap is outlines targets around emissions, renewable energy, sustainable packaging, landfill reductions and social procurement.
The Alliance businesses researched by the WEF are making strides to become “circular companies” by reusing products returned by customers, introducing green packaging and offering education programs to suppliers.
One example, is Unilever’s “Climate Promise” initiative which asks suppliers to set a target to halve their greenhouse gas emissions by 2030, report progress, and share footprint data for the materials they supply to the company.