The world is not on track to meet net zero by 2050. And though nearly 4,000 companies globally have signed up to implementing science-based emission targets, and over 90 per cent of global GDP is covered by net zero commitments – both the UN and the IEA are predicting a much higher forecast a 2.5C path – missing the 1.5C target set in the Paris Agreement and as reaffirmed at COP27.
To make the matter worse for corporates, on average 90% of a company's related emissions come from scope 3 activities, where organisations have a complete lack of visibility. Only 2% of companies have visibility into their supply base beyond second tier suppliers. On top of that, value chains are now more complex than ever before, making these emissions are difficult to identify, account for and manage.
There is an urgent need for companies across the globe to gain visibility into their supply chain, in order to develop detailed, science-based plans to decarbonise. We need better data on the sustainability practices of all businesses in our value chains if there is any hope of building sustainability and resilience into our economy.
This transition is pressing. It’s no longer enough to promise to decarbonise by 2050. These changes need to start happening now, today. With COP27 now behind us, high-level commitments without clear pathways are too. It’s essential we drive practical action and transfer the commitments made into tangible impact.
Value chain data for resilience
Lack of data across value chains is not just hindering decarbonisation plans, but it is also having a major impact on a company’s ability to respond to major shifts and short-term disruptions. The world is still dealing with major structural adjustments as a result of Covid. With geopolitical conflicts and economic instabilities impacting supply chains, these disruptions can cut 50% of global corporate profits over the next 10 years. This is big.
To avoid this, businesses need to generate deeper, multi-tiered visibility across their value chain, which is lacking today. Verified data needs to be collected, shared and analysed by companies across entire value chains in order to source, make, and deliver the most sustainable and resilient products and services.
The length and geographical spread of value chains has created an environment characterised by a long series of one-to-one transactions, where no one has an overview of the entire process. Decisions to optimise parts of a value chain may in fact negatively impact outcomes further downstream of that same chain. What is needed instead is to think of entire value chains as holistic, circular networks, in order to optimise the process end to end – and then the added element of circularity and designing for reuse and recycling.
This would also enable companies to reduce emissions in larger amounts than if they were to decarbonise their own direct operations and power consumption alone — and to do so less expensively.
Collaboration is also key to enable transformation of small and medium-sized suppliers, who do not have the resources and capabilities that large corporates have in order to transform complex value chains. SMEs make up over 95% of companies in the world – and are key in decarbonising the global economy.
Networks of collaboration
That’s why we’re working with our Europe Delivers partner SAP to evaluate and understand key issues across industrial value chains and to identify opportunities for collaborative action to be pursued. A business value chain network will empower strategic, commercially minded and responsive decision-making for sustainability, resiliency and economics.
This network will allow companies to capture and share sustainability data from across the value chain – from raw materials to product design and eventually to drive reuse, recycling and circularity. That way they can optimise their objectives, costs and sustainability in material and logistics, and permits the ability for decision making within impact trade-offs.
“Businesses want to capture, report and optimise Scope 3 GHG emissions, and also to understand critical upstream material dependencies especially highlighted by the semiconductor chip shortage,” shared Karl Christian Roediger, Solution Expert at SAP.
“To manage these emissions, companies need to connect to their n-tiered value chain network activities. SAP joined Xynteo’s Europe Delivers partnership to collaborate with the network for tangible business solutions for sustainability and resilience.”
The future of business is clear. There is either sustainable and resilient business or there is no business at all. Through Europe Delivers, we are taking collaborative action by convening influential value chain players including technology companies, data providers, manufacturers, supply & logistics and transport companies. Together, we will build a shared idea of how a business value chain network across sectors could support a sustainable and resiliency shift in industry.
And we are looking to collaborate on impact now. To join us with SAP and other partners in driving value chain transformation towards a sustainable and resilient future, connect with us here.
Contact us to discuss how we can help your organisation and leaders deliver a brighter future with planet-positive, inclusive, and long-term growth.