The heavier the reliance on energy-intensive processes, the greater the potential to play a pivotal role in global decarbonisation efforts. This blog post explains why a critical component in this decarbonisation effort is switching to renewable electricity (RE) in your supply chain, and how to go about achieving this.
Unlocking the power of supply chains
The Science-Based Targets initiative (SBTi) recently released its guidelines on supply chain engagement, '
Unlocking the Power of Supply Chains for Decarbonization', which underscore the significance of collaborative efforts between companies and their supply chain partners. To align with these guidelines, the SBTi requires companies to set scope 3 targets. These targets include goals for working with suppliers and reducing emissions, covering at least 67% of all scope 3 emissions together. This requirement applies when such emissions constitute more than 40% of the company's combined scope 1, scope 2, and scope 3 emissions.
Given the high percentage of scope 3 emissions attributed to electricity consumption, prioritising renewable electricity has the potential to yield substantial carbon emission reductions, which is better for the long-term health of our planet and gives companies a competitive edge and a reputational boost.
Five steps to decarbonise your supply chain by leveraging renewable electricity
1. Data collection and analysis
The journey towards supply chain decarbonisation begins with a comprehensive understanding of energy consumption and its associated carbon emissions (greenhouse gas emissions that are connected to or result from energy consumption within the supply chain). Collaborating with supply chain partners to collect accurate data is often challenging, but it is paramount. This data provides a baseline from which progress can be measured and targets can be set.
It is important to partner with a credible data partner or build a robust internal data system to ensure strong and consistent data collection, and avoid using messy Excel spreadsheets or data that cannot be easily compared between one supply chain partner and another. For companies looking to reflect their supply chain engagement in their scope 3 emission reductions, the lack of primary data is a key challenge for making credible claims. To accurately quantify and validate their supply chain's contribution to emission reductions, companies must collect data directly from their supply chain partners rather than relying solely on aggregated or estimated data. This ensures transparency, accuracy, and credibility in reporting their environmental initiatives and achievements.
2. Scope 3 strategy development
Armed with accurate data, businesses can develop a robust scope 3 strategy. This involves identifying high-impact areas within your supply chain and setting ambitious yet achievable emission reduction targets.
Renewable electricity sourcing should be integrated as a central pillar within this strategy, and aligning your target and strategy with SBTi criteria ensures that your efforts are science-based and contribute meaningfully to global climate objectives. Along with target setting, crafting a comprehensive supplier engagement programme is an important step in supporting suppliers with meeting their RE sourcing goals.
3. Direct supplier engagement
Engaging supply chain partners is a delicate yet vital step. Collaboration should extend beyond transactional relationships to fostering a shared commitment to sustainability. Companies can provide training materials, workshops, and knowledge-building activities to educate suppliers about the benefits and methods of transitioning to renewable electricity sources. This imparts valuable insights and also demonstrates the commitment of the lead company to supporting its partners' sustainability journey.
In addition to knowledge transfer activities, companies can also provide technical support to their supply chain partners by working with them to set ambitious yet achievable targets alongside developing a strategy to achieve those goals.
4. Implementation of renewable energy solutions
Pragmatic solutions are key to translating intention into action. Companies can facilitate the adoption of renewable electricity through various avenues:
- Purchasing unbundled Energy Attribute Certificates (EACs): EACs typically represent 1 MWh of renewable electricity generation. Purchasing unbundled EACs allows companies to support renewable energy projects indirectly and reduce their own scope 2 emissions.
- Corporate Power Purchase Agreements (PPAs): PPAs enable companies to purchase renewable electricity directly from generators, often at competitive prices.
- Onsite generation: Some companies opt to generate renewable electricity on their premises by means of solar panels, wind turbines, or other renewable technologies.
- Green tariffs: Some companies choose a green tariff, which is typically a bundled EAC product provided by a local power utility or retailer.
5. Track progress using reliable data
Tracking progress accurately and transparently is crucial to validating the effectiveness of your supply chain decarbonization efforts. Companies should establish robust monitoring and reporting mechanisms that capture renewable electricity consumption, achieved emission reductions, and overall sustainability performance. This data not only informs decision-making but also enhances your accountability and improves stakeholder trust.
Setting a powerful example of industry leadership
The SBTi guidelines sound an urgent call to action for all sectors to decarbonise their supply chain. Renewable electricity stands as the linchpin in this endeavor, serving as a potent tool to reduce carbon emissions and advance sustainability goals, while also offering net savings and a positive return on investment. By aligning with the SBTi guidelines on supply chain engagement and following the key steps outlined above, businesses can pave the way toward a greener, more resilient future. As the world navigates a series of complex environmental challenges, the proactive adoption of renewable electricity sets a powerful example of industry leadership and responsibility.