Why the Spotlight Is on Supply Chains to Become Net Zero
Food and Drink Manufacturers have long been under pressure to reduce their own direct emissions, but the Net Zero challenge will force organisations to look beyond their own impact and put a spotlight on their entire supply chain.
These supply chains are often complex and diverse, and cover a whole range of emissions from buildings and operations, manufacturing processes, and transport and logistics of ingredients and finished goods.
This situation has intensified since the UK announcement from Rishi Sunak during COP26 – that all listed companies will have to release Net Zero plans by 2023 and report annually on their decarbonisation efforts. This means the UK’s biggest organisations, which includes food and drink giants, will start paying closer attention to the emissions within their supply chain, ultimately impacting who they do business with.
What this announcement meant, is that listed companies will be required to report on their targets for reducing greenhouse gas emissions from Scope 1, 2 and crucially Scope 3 emissions. They must also include the detailed steps the company intends to take to achieve those targets. Scope 3 emissions are classified as emissions that happen outside of the ‘reporting company’, within upstream and downstream organisations.
- Examples of upstream Scope 3 emissions include; emissions created to create any purchased goods and services, emissions created in creating capital goods, and emissions related to the waste generated in operations.
- Examples of downstream Scope 3 emissions include; emissions from transport and logistics, emissions created during the use of products sold, and emissions related to the end of life treatment of products sold.
So with this broad net of Scope 3 emissions, where does this leave you, an organisation within the supply chain to the food and drink industry?
Put simply, a food and drink brand’s Scope 3 emissions will include your Scope 1 and 2 emissions, plus some of your own scope 3 emissions. This means you will soon be (if not already) expected to provide detailed carbon intensity data to your customers.
But it doesn’t stop there, you will also be expected to disclose specific actions that you are taking to reduce your carbon intensity.
For many businesses who sit within the food and drink supply chain, this will not only be a new challenge but one that cannot be ignored.
As a manufacturer within the food and drink supply chain, the challenges will be around; being able to measure energy consumption at a granular level; being able to analyse and break this information down into meaningful statistics and management information; and then being able to communicate this information downstream; all whilst maintaining or reducing the key metrics on carbon intensity whilst other business and industry pressures continue to play their usual role.
Businesses who are able to get their heads around these challenges will make themselves easier to do business with and ultimately turn the challenge of Carbon Net Zero into an advantage, whilst those who do nothing could find themselves moving to business critical panic mode.
To find out how Businesswise Solutions are helping other Food & Drink Manufacturers contact us at: [email protected]
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