In today’s world, where sustainability and environmental responsibility are becoming increasingly important, carbon accounting and supply chain transparency play a crucial role in helping organizations meet their sustainability goals and reduce their carbon footprint. By tracking and managing their carbon emissions throughout their supply chain, organizations can identify areas where they can reduce their impact, improve efficiency, and meet consumer demand for environmentally conscious products and services.
If in pursuit of a climate-resilient business, knowing all aspects of your company’s supply and value chain is essential. Effectively, supply chain transparency improves an organization’s accountability for managing the social and environmental impact of their operations, helps identify carbon emissions hotspots, and minimizes the risk of potential supply chain disruption. Since supply chain management (SCM) encompasses the production, sourcing, and distribution of goods, it also needs to account for the impact of its suppliers. Improving transparency can lead to greater efficiency in the supply chain, as organizations can identify and address bottlenecks, reduce waste, and transition to more sustainable procurement options. In many cases, supply chain transparency (to some degree) is paramount to regulatory compliance and an instrumental part of executing an actualized carbon accounting system.
While carbon accounting guides the measuring, managing, and reporting, it also considers an organization’s energy usage, transportation, and waste disposal practices. Additionally, carbon accounting helps organizations stay compliant with environmental regulations and standards while providing valuable carbon footprint information for consumers and investors alike. A beneficial tool for many companies is the GHG Protocol which provides a global framework for calculating the associated GHG emissions from operations, value chains, and current mitigation actions. Many companies utilize the Greenhouse Gas Protocol methods to quantify and benchmark their emission outputs, report on their annual progress, and inform their carbon mitigation strategies.
As this practice requires comprehensive supply chain management, it does come with a few hurdles:
Data quality: The quality of carbon emissions data can vary widely, which can lead to inconsistencies in reporting and difficulties in accurately assessing emissions.
Incomplete coverage: Some emissions sources may be overlooked or under-reported, leading to incomplete carbon accounts and potentially inaccurate information for stakeholders.
The use of offsets: offsetting is an indirect way of reducing emissions, and solely it will not be enough to significantly reduce global carbon emissions without using a quantifiable mitigation strategy.
With further standardization, mandatory compliance, and an additionality focus on offsetting, carbon accounting can become more seamless for many companies.
Ultimately, supply chain management and proactive emissions tracking are increasingly important regardless of industry. Both are critical for organizations looking to enhance their obligations to society and the planet, meet customer demand, improve efficiency, comply with regulations, and attract investment.
By implementing these practices, organizations can demonstrate their commitment to sustainability, manage potential ESG supply chain risk, and increase efficiency across their organization.