BY MICHAEL POWER
MANAGING CLIMATE CHANGE
PROTECTING SUPPLY CHAINS AGAINST GLOBAL WARMING Climate change and its risks have shown us how interconnected our world is today. Flooding, forest fires, drought and other events can upend best laid plans. Supply chain leaders must work to dampen the effects of climate change to their operations. But they can also ensure those operations don’t make climate change worse. That need is more important than ever. Heavy rainfall and flooding has hit supply chains recently in British Columbia, for example. The COP26 Conference – the 26th UN Climate Change Conference – in Glasgow, Scotland last month has also brought attention to the climate crisis. The event saw 197 countries agree to a new deal, the Glasgow Climate Pact, aimed at curbing climate change.
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Supply chains play a pivotal role in the process. According to the US Environmental Protection Agency (EPA), over three quarters of the greenhouse gas emissions (GHG) produced by many industries come from their supply chains. COLLABORATION IS KEY One important way that supply chain organizations can reduce emissions is collaboration with suppliers, says Abe Eshkenazi, CEO of the Association for Supply Chain Management. “It’s important to ensure that organizations’ actions are consistent with their rhetoric,” he says. “If an organization is indicating that they hold themselves accountable for carbon emissions, or a single company relative to the environment, it’s much easier to hold your partners accountable.” GHG emissions have risen to become perhaps the single most important issue within sustainability, says Tim Reeve, president of Reeve Consulting. As organizations recognize that supply chains make up such a large part of their emissions, many are engaging with suppliers around reducing that footprint.
“If you really want to look at it in a holistic way as an organization, your own stuff is the tip of the iceberg,” he says. “The more substantive berg is lurking beneath the surface in how it shows up in the supply chain.” To deal with this, supply chain management must be a team sport, says Adel Guitouni, professor of management sciences at Victoria University. Think about how each player adds value, rather than focusing exclusively on which can provide the cheapest price. Where possible, think about exchanges with suppliers as long-term relationships, especially first- and second-tier vendors, Guitouni says. Switching to LED bulbs and other operational fixes may solve a fraction of an organization’s emissions problems. That’s not a bad
thing, he notes, but there is more potential for emissions reductions through forging relationships with vendors. Supply chain leaders should consider the effects on emissions of moving goods multiple times and consider streamlining their supply chains, Guitouni says. He advises taking opportunities to purchase local or regional goods and services. “We don’t need to move the parts of a car between Canada and the US multiple times if we can redesign how we do these workflows, these operations and so on; I think that’s important,” he says. Ask strategic suppliers if they have climate change mitigation strategies and whether they’ve set science-based targets to reduce their emissions, advises Reeve. From there, speak with smaller, less strategic suppliers about carbon footprint reduction and the expectation that those suppliers will play a role in that process. Organizations can also target high-impact procurement opportunities (HIPOs) related to carbon or GHG emissions, says Reeve. These include items that may have an obvious and direct impact on emissions, like power generation, vehicles, stationary and some types of equipment. Another step organizations, particularly in the public sector, can take is looking at the carbon footprint associated with infrastructure and building projects, Reeve says. For example, Infrastructure BC, a crown corporation in British Columbia, has begun looking at calculating the carbon footprint associated with potential design options on new infrastructure and having contractors and suppliers provide that information as part of their bids. “We hear so much about climate change and it can seem like a bit of an overwhelming topic at times,” Reeve says. “I think there are ways to break it down into some chunks. Whether it’s choosing a few product or service categories to focus on or engaging with some suppliers, we’ve got to keep our eye on eating this elephant one bite at a time so that it doesn’t feel too overwhelming and people become paralyzed.” SUPPLY PROFESSIONAL
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