A company’s greenhouse gas emissions (commonly referred to as its “carbon footprint”) are generally divided into three categories called “scopes”:
- Scopes 1 and 2 correspond to GHG emissions from the company’s direct (gasoline, fuel oil, gas, etc.) and indirect (electricity consumption) energy consumption. In other words, these are emissions created directly on site by the combustion of energy and emissions created indirectly by the production of electricity.
- Scope 3 covers everything else, including passenger transportation, waste management, and the supply chain and purchasing.
Scope 3 alone accounts for between 50% and 90% of a company’s GHG emissions, and purchasing and the supply chain can account for up to 90% of this. It is therefore clear that purchasing has a key role to play in the decarbonization of the company. In order to be fully involved in this challenge, buyers must have adequate resources at their disposal.
However, there is currently no “low-carbon” purchasing methodology.
Indeed, if we want to optimize the carbon impact of purchases, we need to be able to identify the categories of purchases that generate the most emissions and prioritize suppliers to work with. However, current methodologies, particularly Bilan Carbone®, do not really allow us to do this. While it does take purchases into account, it translates amounts spent (in thousands of euros) into carbon impact. Therefore,
The results obtained are therefore generally far from the reality of the impact, with, in some cases, up to 80% uncertainty in the results. To overcome this limitation, one might think that it would be sufficient to ask suppliers to provide the purchasing department with their carbon footprint results. This would allow suppliers to be compared with each other and their results to be included in the client company’s carbon footprint. In reality, this raises two problems.
The first is that, in order to be valid, this approach requires each supplier to use the same accounting methodology, with the same scopes and the same emission factors (conversion units used to translate into GHG emissions). However, when we see that only 16% of executives report having carried out a carbon assessment [1] and since Scope 3 integration is almost never mandatory, we can expect to see fairly inconsistent results between suppliers. This makes it difficult to use data collected in this way.
The second question is: what should be done with the data collected? We have noticed that buyers often find it difficult to understand the results of these carbon assessments and therefore do not know how to support suppliers on this basis.
The Carbon Footprint is designed to be a decision-making tool, enabling the identification of the main sources of GHG emissions from the activities of a company or local authority and the actions to be implemented for that organization, rather than being used as a selection or comparison tool. Based on this observation, it is essential that buyers get involved and steer the process on two levels: in terms of the products and services purchased, and in terms of the suppliers contracted.
Helping buyers and specifiers make the right decisions to truly reduce emissions
During a call for tenders, eco-design specifications can be included in the specifications, particularly requirements in terms of energy efficiency or the use of materials with a lower impact in equipment. However, we believe it is essential to go further by selecting the offer with the lowest GHG emissions for the markets that have the greatest impact in this area.
Here again, asking suppliers for the GHG balances of their offerings is pointless: significant differences in calculation methods could skew the results, and very few companies would have the capacity to do so anyway. The level of maturity of supply chains is still quite low in this area: it is mainly large groups that will be able to make such calculations. Conversely, smaller companies would risk being excluded.
We are therefore convinced that contracting companies must equip themselves with emissions simulation tools.
Based on data collected from suppliers (material composition, geographical origin, mode of transport, energy consumption, etc.), these tools simulate the GHG impact of each offer. Armed with this information, buyers are better equipped to make decisions and can also implement action plans.
Based on the results, the buyer can challenge the selected supplier on the impact of their offer and work with them on more eco-designed solutions. Such a tool also provides an opportunity to explain choices internally and identify the most impactful purchases, which are sometimes poorly identified in the low-carbon strategies of contracting companies.
Engaging suppliers to ensure low-emission trajectories
The complexity of reducing GHG emissions generated by procurement requires buyers to review their purchasing practices and create a mode of collaboration based on trust rather than mistrust with their suppliers.
The aim is to move away from top-down relationships, where clients impose a reduction of X% in GHG emissions on their suppliers, and instead enter into a relationship of continuous improvement and partnership, adapting requirements to the context.
These requirements, which are best set in consultation with suppliers, must be sufficiently binding to encourage them to develop a robust and consistent approach to the climate emergency. They must also be designed with a long-term perspective so as not to discourage suppliers and give them time to mature. The appropriate approach is therefore to challenge suppliers by engaging them in calculating their emissions using a measurement and monitoring tool, and to push them to set reduction targets accompanied by an action plan.
However, the supplier market can be an obstacle to this type of approach, as suppliers often lack the internal expertise needed to fully understand the issues, conduct technological research, identify alternative materials, or calculate GHG emissions. It is therefore essential to raise awareness and build the skills of suppliers.
Buyers have a real role to play in providing support. Purchasing departments should not hesitate to involve suppliers in the process (during dedicated meetings or existing supplier meetings) and to be very explicit and clear about their requirements and expectations, putting them into context. Supplier meetings are an opportunity to listen and identify suppliers who are willing to go even further: they can be true allies in the company’s low-carbon trajectory.
Working collaboratively with suppliers to seek out innovation, new processes, or new technologies must also be part of the solutions in the low-carbon purchasing strategy.
At BuyYourWay, we support our clients in creating innovation programs to reduce GHG emissions from purchases, developed in collaboration with their suppliers.
Progress step by step, using an approach tailored to your specific needs, to generate concrete results on GHG emissions and go beyond mere communication.
An ambitious approach to reducing GHG emissions is one that identifies the areas of purchasing and suppliers with the greatest impact and defines the most relevant supplier commitments possible, with the right support.
Buyers must be directly involved, and it is essential to provide them with the necessary human resources and relevant tools.
Training buyers is essential to enable them to provide the best possible support to suppliers. In addition to improving their skills, two effective ways of getting buyers on board include establishing GHG reduction indicators for each purchasing category and setting targets that are included in buyers’ variable remuneration.
[1] Les dirigeants d’entreprises face à la neutralité carbone : au-delà de la volonté, quelle réalité ? IFO and Mazars study, 2019
Crédit photo : Chris Leboutillier
