‘Supply chain executives cannot reduce Scope 3 emissions single-handedly’

Europe’s largest companies are required to annually report on their supply chain-related carbon emissions. Is it the job of the chief supply chain officer (CSCO) to initiate and support projects to reduce these Scope 3 emissions? Yes, say the CSCOs of AkzoNobel, Heineken, Bayer and Vestas. They are uniquely positioned to do so, but they cannot reduce emissions at suppliers and customers single-handedly. “The whole leadership team has to get behind this ambition.”

Every year, supply chain executives are asked which two megatrends will have the greatest long-term impact on business operations. Like last year, sustainability and scarcity of raw materials are at the top (74%), closely followed by digitalization and technological change (63%). Other megatrends such as globalization (21%), labour market scarcity (21%) and reshoring (15%) are a long way behind.

Not the main topic of conversation

However, the fact that long-term sustainability has such a big impact does not mean that it is also currently the most important topic of discussion around the boardroom table. That is digitalization and transformation (58%), closely followed by cost reduction and operational excellence (53%). Sustainability only comes fourth (32%), behind customer excellence and product portfolio optimization (37%).

That sustainability is so low on the agenda of senior executives is particularly striking given the fact that the Corporate Sustainability Reporting Directive (CSRD) came into force on 1 January this year. Since then, all large companies in Europe are required to report on sustainability according to tight guidelines. This includes mapping Scope 3 emissions: the carbon emissions caused elsewhere in the supply chain, both by suppliers of raw materials and components, and by customers and users of finished products. Mapping and reducing Scope 3 emissions seems to be a perfect task for the supply chain executive.

Sustainability is key to success

That is also the opinion of Karen-Marie Katholm, Chief Integrated Supply Chain Officer of paint manufacturer AkzoNobel. “As chief supply chain officer, one of my main tasks is to set up projects that lead to reductions in Scope 3 emissions. Sustainability and corporate environmental responsibility are increasingly becoming key to the success of supply chains. By taking a proactive approach to emissions and promoting sustainability projects, we not only contribute to a greener future, but also improve our competitiveness and reputation in the market in the long term.”

Tommy Rahbek Nielsen emphasizes that the responsibility extends beyond the four walls of one’s own company. “Everything we want to achieve is rooted in the green transition. Therefore, it is necessary that we take responsibility not only for our own emissions, but also for those of the entire supply chain,” says the Chief Operations Officer (COO) of wind turbine manufacturer Vestas. “You have to look at it from the perspective of the entire supply chain. Not only production, but also incoming and outgoing goods flows. In our business, for example, we also have to include long-term installation and maintenance to really make a difference.”

The CSCO is uniquely placed

Thomas Panzer argues that the chief supply chain officer is uniquely placed to influence Scope 3 emissions. “As initiator and sponsor of Scope 3 projects, the CSCO can play a central role in achieving sustainability goals,” states the former Head of Supply Chain Management at pharmaceuticals manufacturer Bayer. “They have insight into the end-to-end supply chain including upstream and downstream activities. A CSCO has great influence and can mobilize multifunctional teams to set up sustainability projects. By working with different departments such as procurement, logistics, production and sales, the CSCO can align all activities to reduce Scope 3 emissions.”

According to Panzer, the CSCO is in a position to incorporate sustainability into the business strategy. “They can implement robust tracking systems to report on sustainability performance in the supply chain. They can work with external stakeholders such as customers, industry associations and sustainability organizations to share best practices and drive industry-wide initiatives. By acting as initiator and sponsor of Scope 3 projects, they can thus contribute to the company’s overall sustainability objectives.”

CSCO cannot do it alone

CSCO Magne Setnes of beer brewer Heineken stresses that the CSCO cannot reduce Scope 3 emissions single-handedly. “Success requires multifunctional partnerships, both internally within the company and externally with suppliers and customers. The entire leadership team must get behind this ambition. Although the CSCO has an important role to play, the collective commitment and contribution of all executives is needed.”