Implementing a green supply chain is a strategic decision that offers various competitive advantages to a company. Firstly, a green supply chain can optimize resource management, reduce operational costs, and contribute to growth. This can be achieved by using recyclable raw materials, eco-friendly packaging, energy-efficient transport solutions, and manufacturing processes that limit water and electricity consumption.
Secondly, many governments have targeted carbon reduction and considered Carbon tax regulation. For example, the European Union has recently launched a “Carbon Tax at the border” regulation, also called CBAM (Carbon Border Adjustment Mechanism) to impose an additional tax on European importers who bring products from outside of the EU.
Furthermore, implementing a green supply chain is crucial in the fight against climate change. By reducing the company’s carbon footprint through sustainable practices and lowering greenhouse gas emissions, it contributes to global efforts to combat climate change. With consumers and stakeholders placing increasing emphasis on sustainability, it not only benefits the company but also plays a significant role in preserving the planet for future generations.
The polluting activities of the companies are divided into 3 categories of scope:
Figure 1 – Scope 1, 2 & 3 GHG Protocol
- Scope 1: Direct GHG emissions from the company’s assets (fuel burning, use of company vehicles, processes inside the company’s facilities…),
- Scope 2: Indirect GHG emissions from the generation of purchased electricity that is consumed in the company’s equipment or operations,
- Scope 3: Other indirect GHG emissions (production of purchased materials and fuels, transport-related activities, product use by consumers…).
The upstream activities of Scope 3 represent the supply chain of a company and can account for 70 – 90% of a company’s emissions. Along with transportation, the raw materials process and importation are the most emissive activity of Scope 3, especially for cement, fertilizer products, hydrogen, steel, and aluminum. These products are in Europe the target of a CBAM (Carbon Border Adjustment Mechanism), that aim is to tax investors on imported products, to reduce the relocation of polluting industries.
TERAO is a pioneer consultant on carbon topics for large-scale suppliers. Reducing the Scope 3 emissions of a company is thus a challenge we must work on, by implementing solutions such as:
- Carbon Footprint training sessions for investors and suppliers,
- Carbon footprint assessment
- Targeting the most polluting processes, products, and sites,
- Implementing solutions to lower the emissions,
TERAO covers all these activities, with a team of auditors who are able to travel on-site and are familiar with local practices, based on energy studies of buildings, and life cycle analysis of imported products and associated assets.
To summarize, here are some reasons why companies should implement a Green Supply Chain strategy. It can be done with the support of TERAO:
Written by Ugoline Lautel
If you need more details, please do not hesitate to contact Gaspard Lemoine-Scales, our Business Development Director, at this address glemoinescelles@teraoasia.com. We are committed to helping our clients achieve their sustainability goals and would be pleased to accompany you on this journey toward a more sustainable future.
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