Green Supply Chain Policy Development

A few weeks back, I met some old friends and made new ones at the roundtable organized by OCBC, Singapore Business Federation, APEC Business Advisory Council. Thanks for the invitation and session. 🔍 Key Insights from the Sustainable Supply Chain Roundtable 🌍 - Global Emissions: Supply chains account for approximately +60% of all global emissions. SMEs contribute significantly but often lack the necessary resources and knowledge to reduce their emissions effectively. - Regulatory Pressure: Regulatory requirements are increasing rapidly. In 2022, only 18% of large companies reported on ESG metrics. By now, this figure has jumped to 79%. This regulatory pressure is pushing companies to include their supply chains in their ESG reports, increasing the complexity and cost of compliance. - Scope 3 Emissions: Businesses are reporting Scope 1 and 2 emissions , but Scope 3 emissions remain challenging to measure and manage. 🌿 Strategy - Engage Suppliers: Large companies or anchor buyers need to take the lead in engaging suppliers. This involves equipping suppliers with the necessary tools and knowledge to measure and reduce their emissions. Successful programs include ongoing engagement and dedicated support to bridge knowledge and resource gaps, integrating GHG emissions in procurement processes, and requiring suppliers to track and reduce emissions. 🏆 Case Studies - Telco Company: A leading Southeast Asian Telco joined the CDP Supply Chain program to support its 5,000 suppliers. The program started by identifying suppliers and necessary tools, followed by introducing sustainability measurement and reporting. The company plans to incorporate external risk assessment and third-party validation to build a sustainable product database for procurement. - Food and Agriculture Conglomerate: A prominent Asian food and agriculture company trained 43,000 smallholders in its supply network. By deploying its own resources to support smaller suppliers, the company ensured regulatory compliance and continued inclusion of these suppliers in its supply chain, demonstrating a successful model of regulatory adaptation and support for smallholders. 💡 Recommendations 1. Engage Suppliers: Large companies should lead by engaging suppliers and effective programs include regular engagement, support for regulatory compliance, and integration of emissions data in procurement processes. 2. Flexible Measurement: Suppliers should adopt flexible approaches to data measurement, utilizing existing tech solutions and prioritizing initial estimations to improve methodologies over time. Buyers should segment suppliers based on emission profiles and allocate resources accordingly. 3. Build Capabilities: Continuous investment involves training programs, financial support, and pilot initiatives to test and implement sustainable practices. Collaboration with ecosystem enablers can amplify these efforts.

Sustainable Supply Chain 🌎 Supply chains represent a major challenge for businesses in their journey towards sustainability. Addressing this complex issue requires a structured, multi-stage approach. Here’s a five-stage process that can guide companies across various sectors: ▪ Understanding Suppliers: Essential to sustainable supply chain management is a deep awareness of all suppliers, including those beyond direct contact. This understanding helps in identifying and managing risks in extended supply networks. ▪ Evaluating Supplier Practices: Setting and enforcing sustainability standards throughout the supply chain is vital. This step ensures transparency and helps mitigate risks related to environmental, social, and regulatory compliance. ▪ Enhancing Supplier Performance: Utilizing digital tools enhances supply chain communication and efficiency. Regular audits and training initiatives are crucial to align suppliers with sustainability objectives, improving overall performance. ▪ Aligning Goals and Assessing Risks: Companies need to synchronize their supply chain operations with broader ESG goals. Implementing risk assessment frameworks considering environmental, labor, and compliance factors is key in this stage. ▪ Driving Business Transformation: The ultimate goal is a long-term commitment to sustainability. This involves continuous collaboration to achieve substantial goals like reducing emissions, increasing product circularity, and maintaining high disclosure standards. Implementing these stages can transform supply chains into a force for positive change, embedding sustainability at the heart of business operations. Source: ERM - Environmental Resources Management #sustainability #sustainable #supplychain #business #climatechange #climateaction #esg #impact #sustainablebusiness

Regulatory frameworks and directives that drive sustainable supply chains: EUDR, CSDDD, and CBAM are supported by a transparency directive, CSRD Together, these regulations ensure that companies not only report their impacts (transparency) but also actively engage in sustainable practices (accountability) to meet the EU's goals of environmental protection, human rights, and sustainability in global supply chains. ◦ CSDDD (Corporate Sustainability Due Diligence Directive) mandates corporate accountability across the value chain by ensuring companies have due diligence processes in place to identify, prevent, and mitigate adverse impacts on human rights and the environment ◦ EUDR (EU Deforestation Regulation) requires companies to avoid products that contribute to deforestation and biodiversity loss. It mandates due diligence to ensure that products entering the EU market are deforestation-free ◦ CBAM (Carbon Border Adjustment Mechanism) serves as a carbon pricing mechanism for imports, aimed at curbing carbon emissions associated with goods transferred into the EU ◦ CSRD (Corporate Sustainability Reporting Directive) – unlike the other three – focuses on transparency through reporting. It requires companies to disclose their sustainability practices, impacts, and goals, including economic activities aligned with sustainable objectives While CSDDD, EUDR, and CBAM focus on embedding sustainability into operational and management processes, CSRD is dedicated to streamlining reporting. The CSDDD mandates due diligence across the chain of activities, ensuring that companies actively oversee risks related to human rights and the environment. Similarly, the EUDR enforces due diligence to ensure that products are free from deforestation, while the CBAM adds a financial incentive by taxing carbon-heavy imports, encouraging companies to manage their emissions. These regulations drive proactive behavior within supply chains, pushing companies to continuously monitor and adjust their practices to meet sustainability standards. The CSRD differs in its emphasis on transparency rather than operational control. This directive requires companies to publicly disclose on sustainability, providing stakeholders with information about sustainable practices. It is more about accountability to external stakeholders, fostering transparency and comparability in sustainability reporting. Reporting under the CSRD allows investors, consumers, and policymakers to assess a company's sustainability efforts, contributing to informed decision-making. It complements the process-oriented directives by ensuring that companies disclose the outcomes and practices they implement for sustainability. Frameworks like the TCFD (Task Force on Climate-related Financial Disclosures), TNFD (Taskforce on Nature-related Financial Disclosures), and Science Based Targets support the CSRD and EU Taxonomy disclosures and foster streamlined reporting and interoperability in disclosures.