The route to zero carbon—and how supply chain organizations can make the journey
- 24 November 2020
- Written by: omerakhan
- Categories: Latest Topics, Omera Khan
Climate change affects us all. And when looking at the causes of climate change, supply chains—and supply chain organizations—are far from blameless.
In 2018, 24% of global greenhouse gas carbon dioxide (CO2) emissions came about from transportation. According to the World Resources Institute, in 2016, the transport sector for the first time surpassed the electric power industry as the single greatest source of greenhouse gases in the United States. In Europe, where most other sectors of the economy have reduced their CO2 emissions since 1990, emissions from transport have risen—and continue to climb.
Cutting those emissions is a major global priority. As consumers, many of us are already making a difference—I know that I am. You probably are too. But it is the world’s businesses and industries which collectively contribute a major proportion of the CO2 emissions that are warming the atmosphere. Factories, offices, data centres, warehouses, various transportation modes—collectively, they are significant consumers of energy, and significant emitters of CO2.
And it isn’t enough for businesses to simply reduce their emissions: that will merely slow the pace of climate change. For atmospheric CO2 concentrations to stabilise, and then actually reduce, net new emissions of CO2 need to be zero. Hence the goal of ‘zero carbon’, a mantra that is increasingly being heard within supply chain organizations
‘Zero carbon’? Is that even possible, I hear you exclaim? Well, maybe not immediately, for sure. But there’s nothing wrong with having audacious goals. And nothing wrong with being encouraged by progress that is already being made towards zero-carbon around the world. Look at the United Kingdom: in the first three months of 2020, renewable energy made up an impressive 47% of the country’s electricity generation. Here in Denmark, where I’m living right now, the use of renewable energy is even higher, with over half the country’s energy usage in 2019 already being met from renewable sources, chiefly wind power.
And in terms of transport, the authoritative Energy Transitions Commission concluded in a report published in 2018 that the decarbonisation of a lot of transport was also indeed attainable over the longer term—through developments such as electrification, biofuels, improved energy efficiency, and modal shift.
But supply chain organizations can make a start towards zero carbon right now. Because decisions about where—and how—products are sourced, manufactured, warehoused, and transported have a significant impact on CO2 emissions. Likewise, too, with outbound supply chains, of course. The journey from the assembly line to the final customer may involve a chain of custody stretching through multiple intermediaries—distributors and logistics partners alike—each with their own handling and storage operations. And at each stage, as goods move between these various intermediaries, transport is required: road, rail, air, or sea as appropriate, each with different carbon footprint.
So yes, one aspect of zero carbon is undeniably about technological developments, some of which are admittedly far off in the future. Electrifying the world’s truck and van fleets won’t be either easy or quick. And cleaning up air freight and sea freight is probably even further off.
But importantly, the route to zero carbon is also about things that supply chain organizations can make a start on right now: sourcing differently, changing outbound and inbound supply chain practices and designs, and making conscious efforts to invest in energy-efficient factories, warehouses, and distribution hubs.
And as I point out in a just-published paper for The Supply Chain Academy, The Route to Zero Carbon plenty of companies are doing just that. Across five continents, Unilever is already using electricity from renewable energy sources in all of its manufacturing and distribution operations, with the goal of them relying entirely on renewable energy by 2030—just a decade away. Maersk—the world’s largest shipping container company—aims to have carbonneutral vessels in commerciallyviable operation by 2030, replacing older vessels with new and efficient ones. And UK facilities management outsourcing firm Mitie has committed to transitioning its entire 5,300strong vehicle fleet to zeroemission electric by 2023, with 20% of them having made the switch to allelectric by the end of 2020.
Yet one of the biggest barriers to achieving such things lies not in technology, but in people—in other words, equipping our supply chain organizations with the leadership, skills, vision and direction to take ownership for making this happen, and accelerating its pace.
Talk to supply chain professionals, and there’s widespread agreement with this. What’s more, there’s also widespread agreement that it’s not ‘hard’, technical skills that matter most, but so-called ‘soft’ skills—the skills required to influence, persuade, collaborate, and communicate.
Why? Because supply chain organizations—and the leaders of supply chain organizations—don’t operate in a vacuum. At every stage, there are people to talk to, people to persuade, and people to convince. Employees. CFOs. Boards of directors. Customers. Suppliers. Logistics partners. And so on, and so on.
Ed Weenk, of Maastricht School of Management, summed it up well when I interviewed him for the whitepaper.
“The world is changing, and it’s changing fast. Crossfunctional thinking, creative problemsolving, influencing skills, being able to ‘speak the language’ of other functions: it’s soft skills like these that will determine progress, and deliver success.”Ed Week
How right he is.