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| 3 minutes read

Net Zero challenge: Consumer products companies need a supply chain plan

Getting to net zero is an imperative for the food and beverage (F&B) industry, which is responsible for approximately one third of global greenhouse gas emissions. After a more gradual rise in commitments following the Paris Agreement in 2015, there has been a surge in pledges since COP26, or the 26th United Nations Climate Change conference, in 2021. Many global corporations have made ambitious commitments around becoming more sustainable and reducing carbon from across their businesses. But with time running out to meet the Paris Agreement target of 1.5°C reduction, a dramatic shift from intent to action – and ultimately outcomes – is needed.  

AlixPartners has conducted proprietary, industry-first research to understand the level of collaboration needed across the F&B value chain, looking at carbon commitments and financial indicators of 235 of the largest companies in North America and EMEA. Based on our research and the growth of F&B emissions as measured by the Food & Agriculture Organization of the United Nations, we don’t believe the industry is on track to meet its Paris Agreement goals

The slow progress stems as much from the complex stakeholder environment as a lack of standards and well-understood and tested solutions. While most companies have baselines and plans in place to improve their directly controlled Scope 1 and 2 emissions, the biggest challenge centers around effectively managing carbon reduction in their supply chain, or what is typically categorized as upstream Scope 3 emissions.

This complexity means it is necessary for companies to create a practical and measurable action plan that works in concert with suppliers. The AlixPartners Should-Carbon methodology cuts through the challenge of both measuring data and creating a plan – making it easier to measure, map, and ultimately reduce supplier carbon. The Should-Carbon methodology translates carbon measurement into actionable plans at each stage of category planning, procurement, and supplier management processes. This approach accelerates cross-business decision-making to mobilize, speed up, and scale carbon reduction initiatives with the organization’s supplier base. 

Should-Carbon creates transparency and collaboratively builds a carbon-reduction roadmap that embeds long-term capability deep into the process. This is done through work in three broad areas: 

Metrics: Create a baseline that supports decision-making and tracks improvement 

  • Identify standards and translate these into business metrics and KPIs that can be monitored 
  • Set up goals that are granular while still being realistic and achievable 
  • Map emissions down to a level of detail that will help teams and partners make a difference 
  • Focus additional level of mapping detail on suppliers that are high emitters and therefore have a higher influence 
  • Model the impact and feasibility of carbon improvement options such as using different ingredients or changing product designs  

Capabilities: Educate and engage the team to build long-term capabilities 

  • Bring in data management, analytics, and performance-reporting capabilities 
  • Recognize differing levels of supplier maturity and tailor plans to these
  • Establish ongoing supplier carbon metrics management tools and capability 
  • Embed carbon management into category strategy, supplier selection, negotiation, and contracting methods and training 
  • Embed carbon management into supplier communications and performance, development, and incentive frameworks 
  • Provide access to subject matter experts for specialist solutions such as carbon economic product modeling, regenerative agriculture, and electrification   

Actions: Set up a roadmap and create systems of accountability   

  • Encourage different functions to work together when evaluating carbon-reduction levers and deciding how these can be implemented into the business 
  • Teams should be accountable to each other as they translate these decisions into action  
  • Prepare teams to deal with potential roadblocks and challenges such as compliance changes, supply-demand issues, and supplier failure   
  • Set up regular reviews and a robust governance structure  

The road to decarbonization is challenging and involves detailed operational thinking and commitment to new ways of working.  

Learn more about our research and how companies can get started on or accelerate their emission reductions goals at our special presentation at The Consumer Goods Forum Global Summit in Dublin on June 21.   

Learn more about the Should-Carbon methodology and how to embed sustainability in your supplier relationships here.

Tags

supply chain, consumer products, should-carbon, sustainability, esg

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