Why supply chain management can impact your Net Zero journey

Make progress on your net zero journey by ensuring your supply chain management is on the right path too. Our Global Head of Sustainability, Kirsty Green-Mann, explains how Hays have taken action – and how your organisation can do the same.

According to a Hays poll on LinkedIn from late 2022, almost two thirds of respondents believe it is important that their business partners set targets to reduce greenhouse gas emissions. Until now, this hasn’t been a mandatory part of sustainability reporting.

However, that is set to change. Toward the end of 2022, the International Sustainability Standards Board (ISSB) voted to ensure that, by 2025, companies reporting on their carbon footprint would have to disclose their Scope 3 greenhouse gas emissions.

What does this mean exactly? A company’s emissions are categorised into three scopes, depending on where they occur in its actions or associated practices. As explained by Climate Partner, with whom Hays is closely working, Scope 3 emissions “includes all indirect emissions that occur in the value chain of a reporting company”.

In this blog, I’ll be looking at how you can influence your supply chain so that they align to your sustainability targets, with examples from Hays’ own actions.

Influence your supply chain on sustainability in your Net Zero journey

Even if you’re not required to report on your supply chain, that doesn’t mean you should be ignoring it. Up to 70% of a company’s carbon footprint can derive from its supply chain. There are a number of ways that this can happen. For example, upstream emissions include travel (either for business or regular commuting), distribution and waste, to name a few. Meanwhile, downstream emissions range from transportation to how your products are used and disposed of.

Ensuring that your partners are committed to reducing their own emissions can make a big difference in reaching your net zero goal. My colleague, David Phillips, has already written about challenging suppliers to be more sustainable as part of your organisation’s post-COVID recovery. So, how can you decrease your Scope 3 emissions?

Steps for making sure your supply chain management has the right impact on sustainability

Finding, communicating with and rewarding supply partners that adhere to sustainability and ethical values is a big step – but it is just one part of the process.

Calculate your Scope 3 emissions. Data is crucial if you’re to set realistic targets, and then accurately measure your progress. Look at your entire supply chain and work out where making changes will be most effective and have the greatest impact.

Set credible reduction targets. Using these insights set your reduction targets. For example, Hays is committed to halving Scope 3 emissions from purchased goods and services and capital goods by 2030.

Get your current suppliers and vendors onboard with your net zero journey. A first step is to develop a Supplier Code of Conduct as we have at Hays. This defines our commitment to carbon reduction in our procurement activities and to responsible purchasing. We expect our suppliers to aim for similar targets, and to promote these standards in their own supply chain.

Build on your engagement with suppliers Contact your top suppliers and contractors initially and encourage them to review the impact of their operations and extended supply chain on the environment. Offer to work together and keep your partners aware of developments.

Monitor and reward accordingly. Keep track of the target suppliers within your supply chain and whether they are making efforts to reach their own sustainability/ carbon reduction targets, as well as yours. Appraise their performance regularly, and consider how you award contracts on the basis of their environmental performance.

Consider the impact of your product or services. What will happen once things are out of your hands? If you’re distributing physical products, can they be disposed of responsibly or repurposed? Will your services or products be used in a way that is detrimental to sustainability targets or your ethical values? Think about procurement: how and what you purchase.

Communicate internally. This applies to your own workforce, too. They have the capacity to make a huge impact. For example, we also promote awareness of our Supplier Code of Conduct and Procurement Policy as it develops among staff involved in procurement activities.

What to remember when considering sustainability in your supply chain

Scope 3 emissions are hugely significant, but not easily quantified or measured. Reaching your net zero targets means getting everybody on board with your mission, from suppliers to employees. Identifying where big changes need to made, and communicate these effectively.