Speaker: Nancy Gillis, Program Head of Climate Action at the World Economic Forum and First Movers Coalition, hosted by Fergal Byrne, Executive Producer, The Sustainability Agenda
As questions surrounding Scope 3 emissions are rising on the business agenda, understanding why and how we must address them is key to achieving decarbonization. With that in mind, we have launched a new podcast series featuring senior business and thought leaders who talk us through their experiences in tackling supply chain decarbonization.
Available on: Spotify | Apple Podcasts | Google Podcasts | Sticher
Supply Chains in Climate Change
Living through the COVID pandemic and the consequences of the supply chain disruptions showed us what the future of climate change is going to look like for all supply chains. The good news is that this has brought to the forefront reasons why businesses need to focus on Scope 3 emissions and therefore address climate change impacts.
It wasn't all that long ago, Ms Gillis notes that concepts such as resilience, responsibility and sustainability with regard to supply chains were considered a future problem. Things have definitely changed now with most of the businesses experiencing first-hand severe disruption impacts. Supply chain disruptions due to climate change is no longer a future problem, no longer future planning.
Companies that are addressing Scope 3 emissions or working with their suppliers within their supply chain throughout all the tiers to actually make themselves more resilient to what they've been experiencing are more competitive. In fact, if we take into account financial institutions, investors and compliance with regulations, we can also talk about greater risk reduction.
Supply Chain Sustainability and Procurement's Unsung Heroes
Ms Gillis observes that the power of purchasing or the power of the purse has been an underutilized strategy as we look to combat climate change, or even just to increase the sustainability of organizations globally. The people who make up that function are the "unsung heroes," she says.
"When you start talking about impacting your Scope 3, you're talking about your supply chain, you're talking about your supplier relationships, and those relationships are codified by contracts, whether you like it or not. "
The more that you have private and public sector players leveraging their purchasing power to say, "If I'm on a decarbonization or net zero journey, I know that most of my impact is in my supply chain, my scope 3. I'm willing to back that up by saying that I'm only going to work with suppliers who are making this important to themselves. The way that I'm going to guarantee that is I'm putting certain requirements on their behavior, or the behavior of the products and services that they provide to me into my contracts with them. I'm going to actually do so, but I'll also help them, I'll support them, I'll engage with them, because really, that's the only way that's going to be done."
Leveraging the Purchasing Power of Organizations
And this is what the First Movers Coalition is about. It's working to take the purchasing power of organizations, in particular, the private sector, and see how that can actually lead towards decarbonizing or reducing the greenhouse gasses of what we call the economically essential sectors. These are sectors that any organization relies on.
They can simplistically fall into two camps, one called Long Range Transportation, so it's aviation and trucking and shipping. The other is called materials. This is for us, aluminum, steel, cement and concrete, and chemicals, whereas chemicals we're bounding into plastics. It's really hard to find an organization that isn't either moving product or people, i.e. the Long Range Transportation, or that doesn't, as part of its product or service, include the aluminum, the steel, the cement and concrete, or the plastics, so definitely economically essential.
First Movers Coalition looked at those technologies and many of those technologies were envisioned, but they were envisioned of coming to commercial scale in market by 2040, by 2050. We look at it and said, "The situation that we're in, these are technologies that aren't bleeding edge, so they're not theoretical." They're there but there's only a small number of them available, so if we could create a demand right now for them, then we could move them forward into adoption before that 2040 or 2050 timeline that's currently envisioned into it by 2030. If we did that, we'd bring that decarbonization, we'd lower those greenhouse gasses much faster and we'd be doing so in those sectors that, this is why I call them economically essential, that any organization is using, which means we'd be bringing down the greenhouse gasses, that right now globally are 30% of those gasses, much faster. What's the first Movers Coalition doing? What we're trying to do is we're trying to take companies who buy on those sectors and we've given them a demand commitment.