Supplier engagement

Procurement of goods and services can make a real difference in reducing carbon emissions. Emissions are associated with raw materials, production, processing/manufacturing, packaging, storage, transport as well as the emissions related to purchased services (maintenance, IT, etc.). For organisations in the aid sector, procurement can account for up to 70% of their carbon footprint.

Engaging with suppliers to decarbonise their business, and therefore their products and services, provides a huge opportunity to drive climate action at scale. Favouring suppliers that are on a decarbonisation pathway can be an efficient way to decarbonise value chain emissions instead of trying to define detailed carbon criteria for every single product.

Organisations in the aid sector buy a variety of products both for use in their headquarters, but mostly for the people they serve. Bought products range from medicines, (therapeutic) food, water treatment materials to clothes, hygiene articles or shelters, to name a few. An aid organisation’s supplier base is often large and spread across the globe, when buying locally is part of the purchasing strategy. This makes a dedicated supplier engagement strategy ever more important to achieving ambitious climate goals.

The scope for action is vast: a recent report by the Carbon Disclosure Project (CDP) (1) showed that more than half of the 11,457 suppliers that responded to the CDP supplier questionnaire did not have any climate targets in the 2021 reporting year, setting targets being the very first step to a concrete climate action plan. With only 38% of the reporting companies engaging with suppliers on climate change, and only 55% on deforestation, the need to scale supply chain action is clear. Organisations that are part of the Science-Based Targets Initiative do not even have a choice: if the indirect emissions from their value chain (i.e. scope 3 emissions, including purchased goods and services, business travel, waste disposal, etc.) are higher than 40%, they have to address at least 67% of them – for example by asking their suppliers to also set a Science-Based Target, thereby creating a snowball effect (2).

Engaging with suppliers on the topic of climate change can take many different forms, ranging from informing them about your climate strategy, bringing the topic up in meetings, providing incentives, to enforcing climate action by requesting suppliers to decarbonise (see procurement criteria for this solution).

Even smaller organisations can start with communicating their expectations to suppliers and enter into a dialogue on climate action. By joining forces with others, for example, through organisations such as The Climate Action Accelerator they can also give weight to their demands on low-carbon products and production processes, thereby supporting the necessary market shift.

Setting and publicly stating your organisation’s goals regarding the reduction of supply chain emissions is the first step.

In close collaboration with procurement, develop an ambitious supplier engagement strategy. The strategy should prioritise which suppliers to engage with directly for highest impact.

Depending on the approach(es) you choose, it should include measurable targets, such as:

• % or number of strategic suppliers to halve their greenhouse gas emissions
• Reducing supplier emissions by a specified percentage by a given target year
• Number of suppliers that use renewable energy / have committed to switching to renewable energy
• Number of product carbon footprints available for priority items by a given target year
• Number of suppliers that participate in supplier webinars on climate action

Communicate your targets clearly to suppliers and start engaging with priority suppliers.

Work together with other organisations to send a clear market signal to suppliers. (5)

(1) Carbon Disclosure Project, Engaging the Chain: Driving Speed and Scale. CDP Global Supply Chain Report 2021, February 2022. Read here.

(2) Science Based Targets Initiative, How-To-Guide for Setting Near-term Targets, 2021. Read here.

(3) Carbon Disclosure Project, Engaging the Chain: Driving Speed and Scale. CDP Global Supply Chain Report, 2021, February 2022. Read here.

(4) Based on carbon footprints of Climate Action Accelerator partners.

(5) Adapted from the 1.5° Supplier Engagement Guide. Read here.

(6) Carbon Disclosure Project, Engaging the Chain: Driving Speed and Scale. CDP Global Supply Chain Report 2021, p. 18. Read here.

Cover photo © Marcin Jozwiak/Unsplash.