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Supply Chain & Operations

How sustainable supply chains can unlock net zero emissions

January 6, 2022

5 - MINUTE READ

In brief

  • The world's largest CEO study on sustainability, the United Nations Global Compact (UNGC)—Accenture CEO Study, finds supply chains are now a major part of CEOs' environmental focus.
  • Supply chains are often the biggest source of carbon emissions in a business—and are central to the battle against climate change.
  • Measuring Scope 3 emissions is a particular challenge, with only 16% of companies able to do so at an advanced level.
  • Companies are also seeking new ways to address growing disruption from extreme weather caused by climate change.

Supply chains are the key to the fight against climate change. Why? Because they generate around 60% of all carbon emissions globally. So fixing supply chain sustainability is an essential step in getting to net zero.

New research from the UNGC—Accenture CEO Study shines a light on how that can happen. With input from 1,232 CEOs in 113 countries and 21 industries, it opens the lid on executive thinking on supply chains. And it provides insights into their role in battling climate change.

Building resilient and responsible supply chains for the future

View Transcript

60%

of all global emissions are generated by supply chains

Supply chains are challenged like never before…

It’s been a difficult year for supply chains. COVID-19 upended supply and demand across industries. But the research shows that’s not the only challenge supply chains face…

49%

of CEOs say they’re grappling with supply chain interruptions due to extreme climate events.

50%

of CEOs in food and beverage are concerned about accessing natural resources due to extreme weather.

26%

of CEOs say supply chain disruptions are a top-three risk in shifting to a low-carbon economy.

72%

of CEOs say sustainability is a priority as they deal with the fallout of the pandemic.

…and many are struggling to respond

The UNGC—Accenture CEO Study shows there’s a lot of work to be done to address these challenges…

54%

of CEOs say their companies haven’t started scenario analyses to build climate resilience—or only do so at a basic level.

52%

say their early warning systems for climate risk events are basic or non-existent.

63%

say that difficulty in measuring environmental, social and governance (ESG) data across the value chain is an obstacle to sustainability.

Supply chains powered by digital technology and data, plus a more diverse workforce, can help drive up sustainability and resilience.

#1 Use the power of data and digital tech

Digital supply chain technology is key to bringing down carbon emissions. And it’s no surprise that 75% of CEOs say they’re already digitizing their supply chains.

Which technologies do they believe will turn the dial on sustainability in the next five years?

87%

say analytics on processes, equipment and products.

78%

say AI-powered demand forecasting.

76%

say autonomous and remote operations will be key.

One especially important technology is the digital twin. Combined with supply chain data management, it enables supply chains to be modeled in real time. So a business can test scenarios for improving resilience and reducing emissions—while also optimizing customer service.

Blockchain is another potential game-changer. Especially when it comes to real-time carbon transparency across the supply chain. It’s one reason why 60% of CEOs say the technology will have a significant impact on sustainability in their industry in the next five years.

3 in 4

CEOs are digitizing their supply chains, using advances in technology to expand the frontier of sustainability

#2 Get the workforce ready for resilience

In driving up sustainability, an organization's people are even more critical. For many companies, the workforce needs new skills to succeed in a digitally driven, resilience-focused environment.

Geographic diversity is equally important. Businesses should be looking to diversify their workforce footprints to hedge against climate and other disruption. But less than a quarter of CEOs say their geographical diversity is at an advanced level today.

And what about the impact of climate change on workers’ physical and mental health? 42% of CEOs see workforce health as a major climate-related risk. It makes actions like health coverage provision and contingency planning even more pressing.

63%

of CEOs globally say they have begun geographically diversifying their workforce

#3 Treat carbon as a business cost

Carbon pricing will be critical to driving down emissions and meeting climate goals. This can happen at both a micro and a macro level.

For example, individual companies can consider placing an internal carbon cost on activities like air travel. The money collected can then be kept for operational expenses, returned to shareholders or used for sustainability projects.

At a macro level, measures like those agreed at COP26 will be vital. Implementing Article 6 of the Paris Agreement paves the way for better international cooperation on carbon markets.

47%

of CEOs from the largest companies have called on policymakers to ratify Article 6 of the Paris Agreement

#4 Focus on Scope 3 emissions

To meet supply chain climate goals, Scope 3 greenhouse gas emissions are particularly important.

Scope 3 emissions are the indirect upstream and downstream emissions that result from company operations. These are typically over 11 times larger than Scope 1 and 2 combined.[1] And the supply chain is a major source.

Transparency is the big obstacle here. Nearly two-thirds of CEOs say difficulties in measuring ESG data across the value chain is a barrier to sustainability.

The key is to focus initiatives through value chain mapping, emissions assessments and benchmarking. Companies can then work with ecosystem partners and suppliers to create long-term sustainable impact.

90%

of overall emissions from fast-moving consumer goods (FMCG) companies are Scope 3 emissions

Supply chains can lead the sustainability charge

With the power of digital technology, companies can reimagine their supply chains to create good for both business and the planet.

As the responses in the UNGC—Accenture CEO Study make clear, action on sustainability is no longer a “nice to have.” It’s now essential.

Chief Supply Chain Officers can lead the charge and accelerate global decarbonization.

1 CDP_SC_Report_2020.pdf (rackcdn.com)

Kris Timmermans

Lead – Supply Chain & Operations

Kris leads Accenture’s Supply Chain & Operations function and is a member of the company’s Global Management Committee.

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