The globalization of the early 21st century, as we know it today, is bound to continue shifting with geopolitics. Major economies will look to form competing trade blocs, thus re-aligning supply chains and further complicating supply chain planning. This process of re-alignment is burdened by ambitious climate change goals set by regulators around the world as well as ever-growing sustainability pressures from internal and external stakeholders.
Regulatory actions continue to increase penalties for exceeding CO2 limits, while eco-conscious stakeholders demand continuous and proactive action to address climate change.
As a first step, organizations are now coming forward and stating their commitments to make voluntary or mandated disclosures, following GRI, SASB, BRSR, CDP, SBTi, etc., standards and requirements. Unfortunately, ESG datapoints collected only for these compliance-related disclosures have very little value because they do not provide:
- Insights into GHG inventory to identify the scope of improvement
- What-if scenarios to determine the best path to achieve sustainability
- Understanding of the ESG datapoints at the strategic, tactical and operational levels
- Ability to incorporate ESG datapoints into the supply chain planning process
- Visibility into costs involved in trade-offs between sustainability goals, risks and profitability
The value path to environmental sustainability from disclosure datapoints can apply in one of these four approaches:
- Carbon offsets
- Operational efficiency
- Low-carbon asset transition
- Redefinition of relationships between various nodes in the supply chain
While the first three approaches are point interventions – an intervention done at a particular point in time or a specific frequency – re-defining relationships involves a continuous systems approach to reducing carbon footprint through supply chain network planning.
Traditional supply chain planning practices rely on achieving minimal costs or maximum delivery with little to no consideration or visibility into sustainability parameters such as supplier sustainability ratings, transportation footprint, production footprint and raw material footprint. But it has become critical for Chief Supply Chain Officers and Chief Sustainability Officers to arm supply planners with essential sustainability datapoints in the planning process. The results can help organizations do more than emissions reporting by:
- Redefining material movement quotas across procurement, production and transportation
- Identifying sources of emissions to enable point interventions for greater returns
- Improving visibility into future emissions across Scope 1 (direct emissions from controlled or owned sources, Scope 2 (indirectly related emissions from the generation of purchased energy) and Scope 3 (indirect emissions that occur as a result of an organization’s affiliation with sources not owned or controlled by the organization) to assess financial implications
- Reducing Scope 3 emissions throughout the supply chain (upstream and downstream).
- Understanding and simulating the trade-offs between cost, sustainability and delivery to improve strategic and operational decisions
- Gaining a competitive advantage by staying ahead of regulatory requirements and cost curves to achieve sustainability goals
Identify Sweet Spots to Balance Profitability, Sustainability and Customer Experience
Bristlecone E360 enables sustainability as a value driver to growth, risk management and capital returns by providing a holistic view of parameters concerning climate action, social responsibility and the circular economy. It brings discipline to sustainability programs with visibility into carbon footprint, ESG reporting, transparency and sustainability performance, extended producer responsibilities, and product compliance. Bristlecone E360 leverages existing datasets across environmental management, raw material footprint, supplier ratings, production footprint and transportation footprint to make the proper business case for sustainability, both internally and externally.
Learn more about our Sustainability Solutions or E360 on the SAP Store.
Consultant, SAP Emerging Technologies