Will the supply chain be the scapegoat for Net Zero?

The clock is ticking down on climate goals, forcing construction clients, their consultants and contractors to get real about cutting carbon.

However, asks Jim McClelland, will it be their suppliers and sub-contractors who ultimately pay the price and feel the pain?

With the sustainability strategies of corporates and brands built around decarbonisation targets in 2030, or even 2025, the heat is on for organisations to deliver on their promises.

As deadlines loom large, investors and shareholder activists become vocal and visible. Acts of dissonance and disruption are not just directed at fossil-fuel giants such as Shell and BP, but also the likes of food and beverage behemoth Kraft Heinz and retailer Costco.

In the face of hostile shareholder resolutions, global companies are being driven to the negotiating table to discuss commitments and concessions with activists. Last year alone, influential nonprofit Ceres tracked 236 climate-related resolutions filed against North American firms, logging 110 instances of their being withdrawn as deals got done.

The glare of bad publicity might be turned on at the top, to secure buy-in from the Board, but the job of making decarbonisation happen cascades way on down the supply chain.

It is all about Scope 3

To have any hope of meeting their climate goals, most organisations need to address their Scope 3 emissions. These are the indirect ones that are hardest to measure and manage as they occur mostly downstream of an organisation’s own activities, in the supply chain.

So, why are Scope 3 emissions so important?

Within construction, research shows Scopes 1 (6.38%) and 2 (1.34%) together make up less than 8% of emissions, with Scope 3 responsible for all the rest — a monster 92.28%.

So, when it comes to the carbon footprint of clients in construction, the supply chain is the problem.

At the same time, the supply chain is also the only solution.

Real risk of losing business

The concern for suppliers and manufacturers, plus contractors and subcontractors, is that this sharper client focus on carbon might not only impact their ability to win new work or fresh orders, but also potentially affect their relationship with existing customers.

Do companies risk losing business? Yes, absolutely.

In fact, it is already happening. According to a report published last year by Barclays Corporate Banking, more than 1 in every 5 retailers (21%) terminated relationships with suppliers who failed to meet their sustainability standards, or ESG criteria.

Some organisations are using stronger sustainable procurement practices, others are introducing green terms and conditions into contracts and legal agreements.

So, what should supply-chain companies be doing to futureproof themselves?

Compliance is not enough

Well, the short-term tactic of merely adopting a compliance mindset is not enough, for two good reasons:

• firstly, in a competitive marketplace, doing the minimum typically drops runners to the back of the field;
• secondly, perhaps even more crucially, it is pretty impossible to decide what the bare minimum actually looks like.

There are plenty of different examples of standards and accreditation out there — from the Science Based Targets initiative (SBTi) for climate action and net zero goals; to ISO 20400 for sustainable procurement; or BES 6001 for responsible sourcing.

There are also numerous highly credible organisations that can offer dedicated training and guidance — from the UK Green Building Council (UKGBC), via the Supply Chain Sustainability School, to the One Planet Network.

With hundreds of permutations to choose from, suppliers are not just spoilt for choice, but in danger of suffering from paralysis by analysis — comply with what?

Moving goalposts and mixed signals

Furthermore, the goalposts keep moving and the signals get ever-more mixed.

The UK Government, for instance, has admitted it looks likely to fall short of its Nationally Determined Contribution (NDC) under the Paris Agreement, hitting only 92% of its 2030 goal, according to (generous) estimates in its own Carbon Budget Delivery Plan.

Nevertheless, the administration appears keen to water down its green commitments still further, rather than fortifying them — as evidenced by recent rumours of both a partial U-turn on the U-turn on onshore wind, plus a likely extension to EPC deadlines for landlords.

To muddy the waters still further, there is also the rising tide of greenwash to consider.

So, how can the supply chain avoid ending up the scapegoat in all of this?

Three steps to a Net Zero roadmap

Well, make a start; and start simple — by taking these three steps towards a roadmap.

Step One: Count your Carbon.

Measure your emissions and impacts. Doubts are often raised about whether clients, consultants and contractors actually have the quality of data they need to make more strategic and sustainable purchasing decisions — so, crunch the numbers for them and add third-party validation for credibility and transparency.

Step Two: Pen your Policy.

Even the smallest of micro-businesses (which make up the majority of the construction supply chain) should take the time to write their own rulebook. The figures and findings from Step One will help inform the focus and shape the strategy.

Step Three: Agree your Goals.

Progressing from intention to implementation, this is where the aspirations of Step Two get turned into actions. Targets determine tasks; and deadlines get stuff done. Net Zero is a journey, with twists and turns inevitable en route — so build in bags of interim goals, as check-in points along the way to plot your progress.

Many organisations will already have done some, or all, of the above (at least once) — for them, it is more a matter of when to revisit and review their travel plan towards Net Zero.

For others, there is no roadmap yet — so fixing Step One coordinates is literally the start.

Either way, the supply chain becomes more part of the solution, than the problem.

Jim McClelland is a Sustainable futurist, editor, journalist, speaker