Businesses urged to seize supply chain opportunity

Corporates could have a significant impact on accelerating the low-carbon transition by driving greater take-up of renewable energy in their supply chains, according to a new report.

The Renewable Energy in the Supply Chain report has highlighted the huge potential to reduce emissions if corporates leveraged their purchasing power to amplify their own sustainability efforts.

Research for the report compiled by SmartestEnergy in conjunction with the Carbon Trust, CDP and Edie, found that there is a significant appetite amongst large businesses to work with supply chains to reduce emissions.

Although progress is already being made by some leading firms, the report says much more could be achieved.

Although capturing and reporting wider supply chain emissions poses challenges for companies, the report highlights that encouraging suppliers to switch to renewable energy is a relatively simple step which could have a significant impact.

As well as cutting emissions, renewable energy offers benefits including greater supply chain resilience and reduced costs.

Switching gathering momentum

The report, which also saw a survey conducted, comes as the number of major global brands pledging to be powered by 100% renewables continues to gather momentum, a trend fuelled in part by the success of initiatives such as the We Mean Business Coalition, RE100 and the Science Based Targets partnership.

Many major companies are now also starting to focus on emissions in their wider supply chains as consumers increasingly look to them to play a leading role in the fight against climate change.

Dave Cockshott, SmartestEnergy’s Chief Commercial Officer, said the findings of the survey which was staged in conjunction with a roundtable held with the Edie Sustainability Leaders Club, highlighted the scale of the opportunity for businesses to amplify their sustainability efforts through the supply chain.

“Procurement of renewable energy by corporates is already having a tangible impact on the increasing proportion of low-carbon generation in the energy mix.

“By encouraging their suppliers to also choose renewables they can rapidly multiply their own contribution to climate change.”
Cockshott said as a supplier to leading brands and second-tier suppliers, SmartestEnergy is seeing a significant gap between what the top sustainable brands are doing and the rest of the business world.

“Progress is clearly being made but is commitment to renewable electricity really at the level it should be? Given how easy it is to choose renewable electricity in the UK, businesses could be doing more to engage with their suppliers,” he said.

Dexter Galvin, Head of Supply Chain for CDP said:

“The increased adoption of renewables within global supply chain networks is key to a successful transition to a low-carbon economy, and will be a huge driver in market growth for the sector,” he said.

“As powerful global brands, corporates can accelerate decarbonisation efforts in thousands of companies by engaging with suppliers and promoting sustainable business practices. They can also lead by example: what better way to communicate the opportunities for cost-savings through reducing emissions than by demonstrating your own best practice?” he added.

Carbon Trust’s senior consultant Guy Rickard said that for most large companies, “engaging with the supply chain is the single biggest opportunity they will have to take action on climate change”

“One of the best ways to have an impact is through supporting and incentivising suppliers to take action on their own emissions, for example through the purchase of renewable electricity.”

Wider responsibility

The survey carried out for the report found a third (33%) of large firms are now keen to start making renewable energy procurement a requirement on tenders.

That percentage looks set to rise in the years ahead with almost all (96%) respondents believing businesses have a wider responsibility to increase uptake of renewable energy through their supply chains.

With supply chain reporting still in its infancy, the survey found relatively few companies (25%) say they currently capture whether their suppliers purchase renewable energy but a further 38% expressed interest in doing so.

The report also highlights more advanced ways for businesses to work with their supply chain to help take advantage of the benefits offered by renewable energy.

These include recommending an energy company which offers a verified renewable product and establishing a buying group which would enable key suppliers to join a portfolio and benefit from greater buying power.

> Download the report