The expectation for companies to have a concrete strategy in place for supply chain sustainability continues to rise, leading many to look beyond goals for their own operations and consider their suppliers’ operations. In recent years, companies, such as Walmart with its Project Gigaton initiative, have been weighing supplier sustainability, and Apple recently announced its intent to have suppliers in its global supply chain decarbonize by 2030.
We sat down with Lindsay Azim, Senior Principal Analyst with the Gartner Supply Chain Practice, to discuss steps Chief Supply Chain Officers (CSCOs) can take to gain visibility into their suppliers’ sustainability practices.
Members of the media who would like to speak with Lindsay further regarding this topic, can contact Barbara Ruane to schedule an interview.
Q: Why is it important for Supply Chain leaders to understand their suppliers’ sustainability practices?
A: For many organizations, Scope 3 emissions in the upstream supply chain, or emissions related to suppliers and outside of their direct control, are much higher than emissions from direct operations (Scope 1 and 2). Not only can suppliers contribute significantly to an organization’s carbon footprint, but suppliers are exposed to physical climate risks that increase the rate of disruption.
Having visibility into supplier sustainability practices is critical to meeting greenhouse gas (GHG) reduction targets, improving the environmental impact of products and services, and building more resilient supply chain networks.
Q: What role should supply chain leaders have in helping suppliers advance sustainability initiatives within the supplier’s organization?
A: Suppliers often lack the resources and skills to drive emissions reductions on their own, requiring collaboration and partnership to enable progress. Supply chain leaders should engage and incentivize key suppliers that have significant impact on the organization’s carbon reduction goals.
Supplier engagement is not a one size fits all and can be a range of support including guidance on setting targets and tracking GHG emissions, identifying opportunities for energy efficiency, financing, and peer networking opportunities.
Q: How can organizations keep track of their suppliers’ progress on sustainability goals?
A: Supplier sustainability must be embedded into existing procurement processes across the entire supplier lifecycle. Procurement has been focused on cost, quality, and service for decades, but with increasing stakeholder expectations and expanding global legislation, an isolated approach to measuring sustainability is no longer strategically viable.
Procurement leaders should set expectations early with supplier selection criteria, include sustainability KPIs in scorecards, and hold suppliers accountable for continuous improvement. Leveraging technology to track progress can allow valuable resources to focus on strategic activities such as building supplier awareness and capability.
Gartner clients can read more in “Market Guide for Supplier Sustainability Applications” and “3 Steps to Accelerate Scope 3 Carbon Emissions Reduction Goals in the Value Chain.”
If you are a member of the media who would like to speak further on these issues with Lindsay, please contact Barbara Ruane. Members of the media can reference this material in their articles with proper attribution to Gartner.