Sustainable Procurement Goals Post COP26 – Will Anything Change?

November 2021 saw the world’s leaders come together and tackle climate change. But what do the outcomes mean for procurement? We explore the impact of COP26.

Back in November 2021, the world’s leaders came together in Glasgow to discuss the future for our environment at COP26. While the conference itself was marked with the usual lobbying, political wrangling and occasional protesting, the internal focus was on containing global warming to 1.5℃ above pre-industrial levels. 

Discussions went down to the wire with an agreement on key areas seemingly not happening until the eleventh hour. 

But how will the agreements reached affect procurement? And, crucially, will anything change?

Main Takeaways for Supply Chains

The crucial thing for enterprises to take away from COP26 is that supply chains are set to come under even more scrutiny when it comes to emissions. This is in part because they now fall under scope 3 emissions as opposed to direct and indirect emissions previously covered under scopes 1 and 2. 

It’s these shifts that mean industry leaders must start planning the next steps for global supply chains on the journey towards climate change mitigation. 

As Gartner reported, despite the Glasgow pact setting the precedent for emissions reduction, national commitments so far cannot keep the world within the 1.5℃ target. This places the focus back on businesses to reduce emissions as part of wider action against climate change. 

In turn, this means the spotlight is well and truly on Chief Supply Chain Officers (CSCOs) because it’s under their stewardship that the majority of harmful emissions occur. CSCOs will need to double down on their efforts to tackle emissions and promote sustainability within supply chains. 

Another key thing that needs to be done is assessing wider portfolios and highlighting any stranded assets or products that could offer sustainable solutions. From loans through to investments, financing is becoming increasingly tied to sustainable performance – something that requires robust governance and reporting systems in order to get right. 

The Challenges of Carbon Emissions Reporting 

There is a lack of transparency when it comes to organisations reporting on carbon emissions. One of the major challenges faced is generating the visibility needed to correctly calculate and allocate emissions. 

Although businesses tend to be pretty good at understanding and reporting on their own emissions, challenges present themselves when trying to collect scope 3 data. This data is difficult to accurately report on because complex supply chain structures hinder the visibility needed to gather data from all tiers of the chain. 

Once the challenges of gathering the necessary data have been overcome, you then need to do something with it. This presents further problems, especially when working with large vendors, as relationship dynamics could get in the way of actionable change. 

Despite these challenges, the increasing adoption of cutting edge technologies within procurement means that data collection is becoming more streamlined. Even if collecting accurate scope 3 data is still very difficult, organisations can instead focus on identifying the areas in which maximum impact and positive change can be achieved.  

COP26’s Impact on the Cost of Carbon

Six years after the notion was first brought to the table, delegates from across the world agreed to Article 6 of the Paris Agreement. This article governs the trading of emissions reduction units and improves rules around the accuracy of carbon reporting. 

The impact this may have on supply chains is as yet unclear. But if we take the EU as an example, we can see that the cost of carbon doubled in 2021 despite the long-established Emissions Trading Scheme (ETS) being in place.

The newly agreed Article 6 covers 196 countries and provides a robust framework for them to exchange carbon credits.  

What is Net-Zero All About?

One of the core objectives of COP26 was getting enough countries to commit to reducing emissions enough to keep the 1.5℃ target realistic. In the end, 137 of the attending countries committed to net zero, albeit on varying timescales. For example, some have already achieved net-zero emissions whereas others, like India, are targeting dates as far off as 2070 and some have yet to commit at all.

Following on from these national commitments, large companies have also laid out their net-zero ambitions. In 2021, we saw the number of companies inside the world’s top 2000 largest committing to net-zero targets increase from 20% to 33%.

Although these pledges are a good sign that change is coming, they are under intense scrutiny post-COP26. That’s why it’s encouraging to see that both the Science Based Target initiative (SBTi) and the United Nations Global Compact recently announced that over 1000 organisations that have a footprint of over $23 trillion across the globe have committed to targets aligned with the 1.5℃ goal. 

So what can we take from COP26? Well, the intent and ambition is certainly there, there is no doubt about that. However, action remains the key and CSCOs will be vital in delivering the sustainable change that is so vital to the reduction of emissions. 

We’d love to hear your thoughts on the impact of COP26 and whether you think enough is being done to facilitate change. Let us know in the comments section below!