More than 50 per cent of global greenhouse gas emissions come from just eight global supply chains, with the food and construction industries making up 35 per cent of these emissions.
The figures are contained in a report by Boston Consulting Group (BCG).
Managing emissions in end-to-end supply chains is one of the fundamental ways companies can reach net zero.
When it comes to emissions from the global food supply chain, the source of emissions is predominantly agriculture and freight, and for the construction industry emissions are generated from cement, steel and plastics as well as freight. According to BCG, the final stages of manufacturing, however, represent only a small proportion of emissions produced across the supply chain.
Emissions reduction measures across supply chains appear to result in only a small cost to consumers. BCG reports that across all value chains analysed, there was a maximum increase of 4 percent in consumer prices. This is due to great efficiencies that can be achieved in many cases, with better use and re-use of materials as well as companies moving to renewable energies.
The BCG report considers the low costs passed onto consumers with the example of the steel supply chain, “Producing zero-carbon steel can increase the steel makers’ costs significantly—by as much as 50 per cent in some cases. But since steel accounts for only roughly $1,000 of total car costs, the markup on this final product will be much, much lower. In fact, the same car made with exclusively zero-carbon materials would cost only about $600 more—or roughly a difference of two per cent.”
Cost increases for food products with Net-Zero supply chains are estimated to be less than a four per cent increase, and construction is estimated to be less than 3 per cent.
Decarbonising Supply Chains
The World Economic Forum has delivered a step-by-step guide that companies can follow to reduce their supply chain emissions.
The five key categories for supply chain decarbonisation include creating transparency, sustainability, engagement with suppliers, engaging with the broader ecosystem of advocacy and certification and introducing low carbon governance across the business.
To meet the commitments to the Paris agreement, decarbonisation of supply chains is critical for all stakeholders, including both businesses and governments.