Whitepaper

In light of the increasingly pressing climate crisis, in this paper we provide insights on the imperative for procurement to address net-zero. Through a market study, we delved into net-zero motivations, challenges, and best practices. The study indicates that while sustainability is a priority for procurement, many companies have not set clear net-zero targets, underscoring the need for stronger action. It’s evident that procurement plays a vital role in driving companies towards sustainability, emphasizing the urgency to act now.

WHY DO WE NEED TO ACT NOW?
In the world of today, businesses are facing many challenges such as ramifications of the pandemic, the Ukraine war, and high inflation rates (IMF, 2023). While such crises are keeping the world on tenterhooks, prioritizing the climate crisis is of even greater importance. Emissions of carbon and other greenhouse gases are causing our planet to warm, resulting in melting icecaps, rising sea levels, and severe weather events. Choosing to overlook safeguarding our planet will affect everyone’s ability to thrive here, and this, in turn, will significantly affect the business landscape.

In the Paris Climate Agreement, 196 countries pledged to limit global warming to an increase of at most 1.5°C by the end of this century, underscoring the importance of reducing carbon emissions. The scientific consensus is that not only governments, but also heavily emitting companies must now act to even come close to achieving this goal (UNFCCC). Furthermore, a shift in society is becoming evident, with consumers placing a growing importance on sustainable products. More and more are paying attention to how companies address sustainability, not only when buying their products but also when choosing their employer (Am, J.B. et al., 2023).

In reaction to the Paris Climate Agreement and the changing societal attitude, legislators across many countries are raising the standards for businesses regarding their sustainability efforts. When we analyze a business impact on our planet, it becomes clear that solely focusing on the company’s operations is not enough to truly address the issue. The high demand for products comes largely from wealthy countries, where more stringent regulations are in place already. However, companies are sourcing substantial portions of their materials and products from countries with unregulated environmental rules. To give more weight to a company’s supply chain, regulators are enacting measures such as the German Supply Chain Due Diligence Act (CSR – Supply Chain Act) and the European Corporate Sustainability Due Diligence (Corporate sustainability due diligence).

Thus, when assessing a company’s carbon footprint, it is essential to hold the company accountable for its entire supply chain (or even its entire value chain). This is crucial because the carbon impact originating from the supply chain ranges from 70% to 90% referred to as scope 3 emissions 1. (Carbon Trust, 2023). This underscores the pivotal role of procurement in shaping the path toward a sustainable business environment. Expanding the skillsets required by procurement experts, who are already managing multiple objectives (Stek, Schiele, 2021).

RESEARCH: MARKET STUDY TO NET ZERO
As companies start their net-zero journey, they typically find that their efforts to reduce emissions become more challenging when addressing carbon reduction within their supply chain. To gain insights on the challenges and best practices, Valuedesk and Sourcing Champions conducted a market study in Q2 2023. A survey-based approach was employed to evaluate companies’ progress in their net carbon trajectory, focusing on procurement experts. The survey received 103 responses. For further details regarding the market study, including information on company sizes and industries, please refer to the Appendix