Decarbonising Procurement: already too late?

The fight against climate change is considered as one of the great causes of our century, and the decarbonisation of our activities has been at the centre of debate for over 10 years. Faced with this challenge, many organisations have made commitments to reduce their greenhouse gas emissions by 2030 or even 2050. These commitments concern a reduction in Scope 1, 2 and even Scope 3 emissions. But beyond these commitments, are companies taking action? Are they on schedule to meet their commitments? Is it not already too late to meet the 2030 targets? What practical steps can be taken to achieve tangible results?

Some awareness, but little action yet

While there has been a lot of talk about the challenges of sustainability, the figures show that there is still a long way to go to put these challenges into practice:

Only 15% of the companies assessed by the Carbon Disclosure Project (CDP) had set CSR targets for 2023.
According to the Transition Pathway Initiative (10/09/2024) conducted by the London School of Economics, only 30% of listed companies with the highest CO2 emissions have set targets for reducing their greenhouse gas (GHG) emissions that are compatible with the Paris climate agreements.

In addition to the number of companies that have made concrete commitments, there is also the question of the solidity and follow-up of their decarbonisation plan commitments:

Only 46% of companies that have made commitments report on the actions they are taking (Transition Initiative Pathway).
According to the Net Zero Tracker report (24/09/2024), only 5% of the 1,900 large companies surveyed meet the quality criteria for a climate strategy as defined by the UN. Namely: precise targets that include all greenhouse gases, or direct reductions in emissions rather than carbon offsetting schemes.

Yet companies have a duty to act

More than just the need to protect the planet, there are many arguments to justify companies taking action on the carbon issue:

Competitiveness: in addition to the image issues, companies that do not evolve risk a loss of competitiveness, raising the question of their long-term survival.
Compliance: the duty of care and regulations such as the CSRD require compliance to avoid sanctions.
Attractiveness: customers, employees and potential recruits all have increasingly high expectations when it comes to these issues, which can lead them to turn away from companies that fail to act.
Financing: with the introduction of carbon criteria by lenders, it will become increasingly difficult for companies to obtain financing if they do not have a clear sustainable policy.
Innovation: more than a threat to the survival of businesses, the challenges of sustainability and decarbonisation can also be seen as a tremendous opportunity to innovate and disrupt established markets.

A responsibility: it is up to Procurement to play its part

In the light of these observations, it is important to remember that all the experts who have spoken on this subject over the last 2 years agree that purchasing departments play a central role in their company’s performance in terms of decarbonisation. At By.O we have been convinced of this for over 5 years, and shared our convictions and methods back in 2021: Link to the methodological publication (Harvard Business Review).

While 70% to 90% of a company’s carbon impact comes from its suppliers (scope 3a), a decarbonisation policy cannot succeed without involving its ecosystem:

By making clear, ambitious and realistic commitments
By prioritising strategic suppliers with the greatest carbon impact
By training and supporting suppliers over the long term
By co-constructing a roadmap with them that will make it possible to measure GHG emissions more reliably and meet our reduction commitments.

To achieve this, Purchasing Departments face another challenge: the question of training. While it is not necessary for every buyer to become a CSR expert, they must nevertheless have the skills to understand the carbon emission factors in their portfolio and be able to manage the actions implemented with their suppliers.

Decarbonisation plan: the time to act is now!

Fortunately, it’s not too late, but the time to act is now! The first step is to define the ambition of your organisation, but we have seen that it is the lack of concrete operational actions that is the problem today.

At By.O, we have a proven track record of delivering supplier decarbonisation projects since 2019. We support major international groups in securing their carbon trajectory:

Either by piloting “carbon performance plans”.
Or by developing the methods and skills of purchasing and business teams.

Today, we’re putting this experience to good use by sharing the 4 types of project that By.O. believes enable sustainable transformation of purchasing actions:

Today, we are putting this experience to good use by formalising the 4 stages of sustainable transformation according to By.O :

Option 1: Connect to the supplier base (entire base or priority panel) to develop internal knowledge of partner maturity
Option 2: Develop reference systems (tools, methods) and skills to enable purchasing teams to implement decarbonisation actions
Option 3: Involve the supplier base in targeted and controlled decarbonisation actions (determine the levers to be activated by category, commit suppliers to action and measure).
Option 4: Undertake collaborative transformation initiatives (e.g. investment in low-carbon production tools)

This method has been tried and tested with a number of customers, with whom we have involved a total of almost 800 employees and 7,000 suppliers in 14 countries, reduced scope 3 by more than 15% and secured a pathway for reducing GHG emissions by almost 40% by 2030.

Conclusion

Environmental performance will not be achieved at the expense of your economic performance.
To achieve this, it is essential to make an early commitment to defining the most appropriate strategy and involving teams and suppliers in an operational approach.
For fast, effective results, our team is on hand to provide you with the solutions you need to ensure you achieve your low-carbon objectives!