The case for prioritizing net-zero carbon emissions, especially in value chains
As we breathe smoky air from another devastating wildfire that is threatening Northern California communities, we are once again reminded of the need to aggressively address climate change locally and around the globe.
The fires follow catastrophic damage from Hurricane Dorian in the Bahamas and historic flooding in the Midwest. As the frequency and strength of extreme weather events increase, the effect of climate change on our planet and communities has become ever-present — making it harder for citizens, governments and businesses worldwide to ignore the impact.
Kaiser Permanente and BSR recently partnered with Newsweek for a survey of 300-plus multinational companies on progress toward carbon neutrality and found that 70 percent of corporations are experiencing disruptions in operations due to climate change. Now, these businesses’ efforts to reduce their carbon footprint and integrate sustainable practices into their operations have created new challenges — and opportunities — for global supply chains.
According to the 2018 National Climate Assessment, we must achieve net-zero carbon emissions by 2050 or earlier to prevent irreversible harm to our planet’s health. Newsweek’s survey results indicate momentum is building across industries to embrace sustainable programs.
For example, we were encouraged to find that 76 percent of companies surveyed have set a goal to achieve net-zero carbon emissions from organizations’ operations, with 90 percent aiming to reach this goal by 2030.
These findings reinforce the urgency of the situation at hand and spotlight the importance of developing adaptable policies and building resilience to stay afloat. To do so, companies must learn to prepare, plan and adapt to changing environmental conditions to mitigate risk for the climate, customers and bottom line.
Disruptions in the supply chain
Globally, seven in 10 respondents reported climate-related events had disrupted supply chains over the past year, with six in 10 experiencing direct impacts to their operations.
As seen in the aftermath of Hurricane Maria, climate-fueled events can rupture the global supply chain, leading to months of nation-wide shortages for crucial supplies such as saline bags at hospitals including Kaiser Permanente.
Witnessing the sometimes devastating effects of climate change firsthand, it comes as no surprise that many businesses’ primary motivation to achieve carbon neutrality is insulation from future climate risks.
For companies such as Kaiser Permanente, this means embedding efforts to mitigate climate change into day-to-day operations — including how the company manages buildings; purchases food, medical supplies and equipment; consumes energy; and processes waste. By reducing emissions through climate-smart programs and advancing environmental stewardship across supply chains, organizations can catalyze decarbonization across the economy.
Reducing upstream and downstream emissions
Focusing only on emissions that companies have under their direct ownership or operational control misses those which occur through the products and services businesses purchase, and also in how their own products and services are used.
In fact, these so-called "Scope 3 emissions" account for the largest volume of emissions that companies can influence. And reducing emissions associated with a company’s value chain offers the potential for aggressively mitigating the worst impacts of climate change.
Examples of climate-smart actions in the value chain include:
- purchasing from suppliers with lower carbon emissions
- increasing product lifespans and reducing waste
- reducing vehicle trips by employees and customers
- shifting investments away from fossil fuels
In addition to revising procurement standards, our survey results indicate leaders actively engage and support key suppliers to reduce emissions — with six in 10 executives recognizing the imperative for companies’ main suppliers to switch to renewables as part of the organization’s net-zero goals.
BSR encourages its network of members to set results-driven goals and embrace an "act, enable, influence" framework to advance an effective climate strategy.
By first acting to address operational emissions, companies then can encourage and enable action by suppliers and partners to reduce downstream and upstream emissions at scale. However, Scope 3 emissions are often spread thinly across supply chains, so without an effective influence strategy, companies will not foster the policy environment needed to achieve these goals. By addressing emissions and encouraging suppliers to follow suit, corporations targeting Scope 3 emissions are leading the charge toward net zero.
A shared goal for all: collaborating for a healthier planet
The path to achieving net zero by 2050 isn’t easy, but it’s achievable. No one organization, industry or government can do it alone and it will take a collaborative, coordinated effort to succeed.
Leading organizations are setting themselves apart by embedding a core commitment to sustainability within their existing corporate mission. Enacting such a cohesive strategy will solidify partnerships, ultimately the driving force for change in the space. On average, survey respondents with net-zero goals listed 10 partners from a list of 18 they believe will have a material impact on achieving defined goals. By involving key leaders in the sustainability field, businesses can accelerate success in reaching these target numbers.
Partnerships with NGOs and involvement in coalitions such as RE100, a network of companies committed to sourcing 100 percent renewable energy, form a critical part of Kaiser Permanente’s zero-carbon strategy — Kaiser Permanente is proud to be well on its way to being carbon neutral in operations in 2020.
At Kaiser Permanente, we prioritize partnerships to develop policies and systems that strengthen community health and protect our environment. The impact of climate change on both our environment and human health is substantial and affects everyone, with the greatest impact falling on those who are most vulnerable.
BSR continues to build its portfolio of collaborations and coalitions aimed at enabling companies to take effective climate action. Long-standing efforts such as the Clean Cargo Working Group, Future of Fuels, and our work with the We Mean Business coalition, have been joined in the last year by our new Value Chain Risk to Resilience platform, and the formal launch of the Renewable Energy Buyers Alliance in partnership with WWF, WRI and the Rocky Mountain Institute.
The road to net zero will require continued public-private and cross-industry collaboration from leaders. Next week, BSR will convene thought leaders to collaborate on the path forward for businesses to address the most pressing sustainability issues, including climate change at the BSR Conference 2019: The New Climate for Business in San Jose, California.
We invite you to join us and collaborate with like-minded organizations. Together, we will pave the way for companies, people and the planet to thrive in this era of rapid change.