BEST PRACTICES FOR DEEPENING PARTNERSHIPS TO ADVANCE VALUE CHAIN SUSTAINABILITY

Kyra

Whitten, Vice President, Sustainability, President, Flex Foundation, Flex

An organisation’s influence does not begin and end within its walls, especially when it comes to sustainability impacts and outcomes. Net zero targets need to be hit by 2050 and in order to meet this deadline, organisations must prioritise the creation of science-based plans and deepening their value chain partnerships to minimise both direct and indirect emissions.

Reducing Scope 1 and 2 emissions, which refer to a company’s direct greenhouse gas emissions and the emissions associated with its purchase of power or fuel, is no longer enough. There is an urgent need to tackle Scope 3 emissions, which extend to the emissions from other segments of a business’s value chain. These include emissions from transportation and distribution activities, among others, and can often be difficult to capture and measure. So, what are the best practices that organisations can look to embrace to start making an impact?

IDENTIFY CHALLENGES TO INFORM YOUR GO-FORWARD PLAN

Identifying your organisation’s respective hurdles is critical to informing a go-forward plan and identifying foundational efforts to curb Scope 3 emissions. This can look dif- ferent depending on your business’s operations, where you are in the value chain and the maturity of your partners’ sustainability efforts. Having a solid grasp of obstacles enables a thoughtful, systematic approach to engaging value chain partners in both the short and long run.

For manufacturers, tackling Scope 3 emissions is especially challenging, requiring expert knowledge, measurement tools and resources as well as the ability to collaborate across the value chain in scalable ways. A few of the common challenges encountered include:

• Aligning with suppliers around common, shared values while recognising that they may be at different points in their own sustainability journeys

• Ensuring value chain partners have a strong understanding of how to report their emissions

• Using a standardised disclosure framework to collect and report data

• Guiding supplier goal-setting efforts, which can be time and resource-intensive endeavours

Recognise The Value Of Transparency And Communications

Given that organisations can’t address Scope 3 emissions alone, transparency and ongoing dialogue with partners are paramount to articulating the importance of concerted efforts, securing stakeholder buy-in and scaling knowledge and best practices. By keeping in close communication with suppliers, vendors and customers, businesses are better equipped to take their next steps on their sustainability journey and successfully bring others along with them. By having open and honest discussions, teams can avoid running into problems later on such as a lack of alignment. They can also identify ways to enhance processes together, and ultimately, enrich partnerships.

As environmental regulation continues to grow, having established relationships with trusted value chain partners will be vital. Working with suppliers and vendors who are invested in sustainability and take pride in their own ESG performance will make for a smoother and stronger partner- ship. It is also important to acknowledge that sustainability is evolving every day, and while we don’t have all the answers, establishing good quality partnerships allows businesses to make changes easier.

Prioritise Standardised Measurement And Disclosure For Scalability

Measurement and disclosure are tenets of any impactful, credible sustainability effort. This ethos can also be applied to reducing emissions or any other environmental impact for that matter, in collaboration with customers and suppliers. Baseline data serves as a foundational jumping-off point to not only gauge current performance but also establish a strategy and goal-setting.

When working with value chain partners, it is critical to understand where they stand in their sustainability journey and goals. Questions to consider include:

• Is a trackable sustainability strategy or metrics system in place already?

• Is ESG data reported to any regulatory bodies and is there assurance of the data?

• Does their sustainability roadmap align with your own and where does it diverge?

• Are goals, commitments, and measurable data aligned?

Remember, robust and reliable reporting systems can take time to integrate into an organisation, so planning, prioritisation and standardisation is key. It is therefore essential to select areas with partners which are the most critical areas to track, while also being mindful of cost and resource limitations.

For example, if an organisation works with smaller suppliers, it may not be reasonable to have them report to an intensive framework that is targeted towards larger, publicly traded companies. But, it does make sense to establish a baseline reading of their emissions, water usage, and waste management to assess your own business’s overall environmental impact.

Sharing best practices and learnings from your own company’s sustainability journey and disclosure efforts can support value chain partners embarking on their own mission. This allows you to advise value chain partners on methodologies and metrics that will be easy to implement while setting a foundation that allows for future scalability with additional partners, not taking an all or nothing approach right from the start.

WHAT’S NEXT FOR THE INDUSTRY?

Creating a more sustainable future demands action, accountability and collaboration across governments, nonprofit organisations, companies and communities. In the case of businesses, it also requires that we take a broad and critical view of our entire value chain and review whether our partners are in alignment with our sustainability roadmap.

Actively working with suppliers, vendors and customers to take continuous strides to make sustainability a part of the entire value chain is becoming increasingly important. Whether working together to lower emissions, minimise waste, or identify the right circular economy solution for your customer’s needs, businesses must strive to maintain an open channel of communication and transparency with all those involved.

As organisations continue on their sustainability journey, it is important to remember that a true and in sync partnership cannot be achieved without ensuring that not only the businesses but also the people relationships are aligned on the same goals, vision, and overall mission to make the world a better place and create a more sustainable and eco-conscious future. c

Sally Uren

Chief Executive Forum for the Future

Dr Sally Uren, Chief Executive of Forum for the Future, is a sustainability champion. The trained environmental scientist creates and delivers truly transformative sustainability strategies for global businesses and organisations, leading to systems change. Among her impactful projects, Dr Sally Uren has helped to develop and embed the Net Positive goal to which many organisations aspire.

In this exciting interview with Dr Sally Uren, courtesy of The Sustainability Speakers Agency, discover her message for businesses not already combating climate change and her top tips for integrating sustainability policies in your daily operations.

What are your top tips all businesses should adopt to improve their sustainability policies?

“First of all, focus on your big impact areas.

“Sometimes, sustainability policies don’t focus on where you can make the biggest difference. So, for retailers, there’s been a preoccupation with the plastic bag, which is not a material impact area. However, where and how you’re sourcing raw materials, really is a much bigger impact area, how you are helping your customers lead more sustainable lives through the use phase of products, is also much bigger than a carrier bag. Focus on those big material impact areas.

“Then the second is, be specific to your business. You see lots of sustainability policies where you could erase the title and switch them over - they’re a bit vanilla. A really good sustainability policy should be really specific to your business.

“Tip three is set targets, put targets in your policy. Science-based targets for climate are the targets for customers reach with new products, for example, or revenue sales from sustainable products.

“And finally, be honest and authentic. Use your policy to talk openly and honestly about your progress.

“If you do those four things - focus on the material impact areas, include targets, make your policy specific and be honest and open about your progress - I think we’d see a general uptick in performance.”

Do you believe leading businesses and brands are doing enough to combat climate issues? If not, why not?

“No, they’re not - nobody is. “Why not? Partly because of the constraints of the economy that we’re in, and also the economy that is fuelled to a considerable extent on short term profit maximisation. And so, whilst there is a really strong business case for sustainability, you may need upfront investment in, for example, solar panels or other renewable types of energy. You may need to enter into long term contracts with your supplier and actually commit more resources upfront as a way of building resilience in your supply chain.

“If you are having to meet really short term demands on profitability, then that longer term investment becomes harder - even though you can show the rate of return. So, one of the biggest barriers is this drive for short term profit maximisation. It’s really great that investors are beginning to realise that short term profit maximisation without a view to long term value creation is really short sighted for long term prosperity of the market.

“I think there’s another barrier which is much more human, which is, I just don’t think we’re ambitious enough. I think we’re too comfortable. We’ll tweak things here, tweak things there. I think another barrier is what we would call mindset, there’s a lack of ambition in some quarters and a lack of creativity.

“If we can be bold and ambitious, then I think you’ll see an acceleration [of sustainability].”

In the last few years, we have seen a big move to large-scale brands bringing sustainability positions into the boardroom. What do you think has driven this and are you seeing enough change in their actions?

“I think what has driven sustainability entering the boardroom is an understanding that this isn’t a peripheral agenda, that this agenda really does impact business prosperity.

“Also, people really care about it. Many employees now really are expecting their organisations to do the right thing by this agenda - all the change we’ve seen over the last few years has created a really compelling business case to take this issue seriously, that’s why I think it’s headed to the boardroom.

“The rate at which sustainability is entering into those conversations is fairly good. Again, in the pandemic, it’s increased. So last year, the number of organisations adopting science-based targets doubled in the pandemic.

“Is it fast enough? Probably the rate at which the conversation is heading into the boardroom is fast enough. What isn’t fast enough, though, is the response. We’re still seeing too much hand wringing dialogue, what we need are big, bold targets, and commitments to new business models, commitments to new ways of offering products into the marketplace. “We need action.”

How is sustainability shaping consumer shopping trends?

“In many different ways, and particularly heightened as a result of the pandemic. Heading into the pandemic, awareness and understanding of sustainability was on the rise. What the pandemic has done, has really shown us all the deep interconnectivity between our natural system and us as humans, so that link with the health of the planet.

“Covid-19 started with illegal wildlife trading in Wuhan. But actually, it started before that... the theory is that illegal deforestation gives rise to these zoonotic viruses that then enter our food system and make us sick. I think that understanding of the interconnectivity between our natural world, our health and the economy has been heightened by Covid-19. As has the importance of community, so creating products and services in ways that build community resilience.

“I think consumers are asking more now than they were before the pandemic, in terms of, ‘how has this been made? Who made it? And what are the benefits of buying this product for the bigger causes?’.

“There was a really interesting report that came out about three weeks ago, a survey by one of the United Nations agencies. They surveyed over - I think it was 50 million people, over 30 countries. And 2/3 said, ‘the climate emergency is real, and we need to do something about this’.

“I think that sustainability issues are really shaping consumer sentiment. The big flare up around racism that we had in the last few months, the million-dollar question is, ‘how is that translating into active purchasing choices?’ I think that is beginning to happen, because we’ve shifted from a situation where sustainability brands or retailers tended to drive the prices of organic or sustainable products. And therefore, there became a narrative that sustainability cost more. It actually doesn’t, it saves you money.

“So now, we are in a situation where we’ve got products that are more sustainable than the one next to them, and they’re the same price. I think that’s going to tip the market.”

Many stakeholders believe that going sustainable costs more, what would you say to convince them to implement sustainable practices?

“Just do a long-term cost reward calculation… “We used to worry that the price of renewable energy was too much higher than the price of fossil fuel. It’s actually now cheaper. Those organisations that did a long-term pricing analysis, they’re doing really well right now because they’ve got access to the energy that they need. They’ve got into long term contracts. Actually, the price of renewables will go up as a result.

“I think it’s really important to not just focus on the short term, but to imagine your business five years from now, 10 years from now - where and how will you be sourcing your energy? Who will be your customers? What will you be selling? Because it won’t be what you’re doing today!

“The business case is really strong today - cut carbon, you save money; cut waste, you save money; cut water, you save money. You build brand trust, building strong customer loyalty programmes. If you don’t act now, the chances are that as a business, you’re being uncompetitive and maybe out of business in five years from now.”