Key Takeaways
- Mandatory Reporting Is Transforming the Landscape
Due to the mandatory reporting regulations coming into effect in Australia and the broader ISSB standards globally, businesses are facing increased pressure to manage and report on their carbon emissions. The new compliance landscape means that companies must align with these standards and work closely with their supply chains to ensure data accuracy and transparency. - Understanding Scope 3 Emissions
Scope 3 emissions, which include indirect emissions from your supply chain, have become a critical focus. Your organization’s sustainability goals are now tied to those of your suppliers. It’s essential to understand and manage these emissions for both compliance and environmental impact. - The Power of Supplier Engagement
Engaging suppliers in sustainability is not about penalizing them for non-compliance but about building a transparent and collaborative approach. Organizations should educate their suppliers on the importance of sustainability, help them collect data, and work together to reduce emissions. Providing resources, workshops, and clear policies can help suppliers improve their sustainability practices. - Setting Up Transparent Reporting Systems
The key to successful supply chain engagement is transparency. Having a well-defined process for collecting and reporting emissions data ensures clarity and trust. Companies need to request emissions data from their suppliers and ensure it aligns with their sustainability goals, using standardized frameworks for comparison. - Proactive Engagement Is Essential
To ensure long-term sustainability, companies must integrate supply chain engagement into their procurement processes. Setting clear expectations for new suppliers from the outset and re-engaging current suppliers for updated data annually is essential for tracking progress and maintaining accurate data over time. - Leveraging Technology and Frameworks for Efficient Data Management
Technology solutions, like NetNada’s transparency hub, are essential for automating and streamlining the process of collecting and managing supply chain emissions data. Businesses should use these tools to engage suppliers, monitor data, and generate insights to drive sustainability initiatives.
Q&A
Q1: Can you explain how to integrate carbon accounting into procurement processes and use it to make more informed supplier selection decisions?
A: To integrate carbon accounting into procurement, ensure that your procurement process includes clear expectations for sustainability data from all suppliers. Start by drawing a line in the sand from 2025, requiring all new suppliers to provide sustainability information. For existing suppliers, proactively engage them to begin sharing their sustainability data, even if they don't currently have detailed emissions reports. Use this data to compare suppliers and make more informed, sustainable decisions.
Q2: How do we handle situations where suppliers are unwilling or unable to provide sustainability data or report on emissions?
A: If a supplier is unwilling or unable to provide sustainability data, use standardized emissions factors based on their location and industry. While it's not ideal, it will still allow you to gather some information on their emissions. It's important to continue the conversation and educate suppliers on the importance of sustainability data, explaining how it benefits both parties in the long run.
Q3: What’s the best practice to select suppliers to engage with?
A: Start by identifying where the majority of your emissions come from. Focus on your top 100 suppliers that account for the majority of your emissions. For smaller suppliers, it's still important to engage them, but prioritize those that have the biggest impact on your sustainability goals. Use benchmarking and industry comparisons to guide your supplier engagement strategy and provide them with the necessary tools and information to reduce their carbon footprint.
Q4: Are companies starting to set Scope 3 goals for their suppliers?
A: Yes, larger organizations, particularly in high-emission industries like waste and recycling, are starting to set Scope 3 goals for their suppliers. For businesses looking to engage with suppliers on Scope 3, it’s important to have those clear goals and expectations in place. Suppliers that can demonstrate they exceed the industry benchmarks for sustainability will be more attractive to these organizations.
Q5: Is it reasonable to only collect Scope 1 and 2 emissions data from the most material suppliers? Will there be an expectation to get Scope 3 data from them?
A: It’s reasonable to start by collecting Scope 1 and 2 data from your most material suppliers. If your suppliers can also provide Scope 3 data, that’s ideal. However, if Scope 3 data isn't available, focus on building those relationships, educating your suppliers, and requesting this data over time. By asking for all levels of emissions data, you'll be able to make more informed decisions and create a more complete sustainability strategy.
