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With concerns over climate change mounting and with the global push towards sustainability and the commitments to Net Zero carbon emissions in the near future, businesses have to look for ways and means to incorporate environmentally friendly practices in their value chains.
One such critical intervention could be the “reening” of supply chains or becoming zero carbon footprint based in the end to end global supply chains. Before we proceed, we will define and explain some of the terms that have been used so far and in the succeeding sections.
To start with, any international or for that matter, domestic business relies on supply chains for their existence. These supply chains can be made Net Zero compliant meaning the end to end supply chain components would balance the emissions and the “savings” in carbon footprint such that the net result would be Zero carbon emissions.
Carbon footprint is a term that denotes the amount of Carbon emissions that a process or practice of a business emits over its existence. Taken together, these terms are very important for sustainable and environmentally friendly businesses and practices.
How do businesses go about “greening” their supply chains? For one, they can focus on using EVs or Electric Vehicles to transport their goods between the places of production and sales. Let us see how this works and why this does reduce carbon footprints.
As EVs do not emit carbon, since they use electric power to run, unlike Oil guzzling trucks and trailers, businesses can use EVs as a means of greening their supply chains. Considering the fact that transportation forms the major (if not entire) component of the supply chain, using EVs can be a “game changer” for businesses trying to be Net Zero compliant.
On the other hand, even the transshipment and translocation hubs that form parts of the supply chain can be made Net Zero by powering them with renewable energy sources and using automated and energy efficient handling and sorting of goods.
Indeed, if businesses are serious about greening their supply chains, there is no better way to go about than by using EVs. However, global supply chains depend on huge ships for moving goods and this is where multinationals face challenges as they strive towards Net Zero and at least, land based greening can help.
There is a business case to be made for greening supply chains and as we will explain subsequently, Net Zero can indeed mean Net Profits in the current consumer landscape. This is because globally, there have been many efforts towards educating and informing as well making consumers aware of the benefits of buying goods and services from businesses that are environmentally friendly.
Moreover, the rise of the Eco-Chic consumer or the category of consumers for whom consuming “green” goods and services is both an act of consumption and a fashion statement means that global as well as domestic businesses can tout and market their “green” supply chains as an USP or a Unique Selling Proposition to target this consumer segment.
Indeed, green supply chains can be a source of sustainable (literally as well as figuratively) competitive advantage. On the other hand, the Biden Administration is doling out Billions of Dollars to businesses that “green” their business practices and so, this is yet another gain for any business and an incentive for them to embrace green business practices.
In addition, there are also the regulatory requirements from the governmental and international bodies like the United Nations which need to be followed.
Having said that, it is not always the case that the Grass is Greener on the Green Supply Chain side. For instance, as mentioned earlier global supply chains depend on transnational shipments that are inherently polluting and so, they need to find ways and means of greening their supply chains in other parts of their value chains.
Of course, much progress has been made in recent years in this regard as well and so, there is some value addition as well.
In addition, businesses should not use the Green agenda for window dressing purposes, or in other words, should not present themselves as “green” whereas in reality, being anything but that. The term used for such practices is Green Washing, which means many businesses have a facade of sustainability and market themselves as such, without any meaningful attempts to embrace environmentally friendly business practices.
Moreover, the pandemic has resulted in clogged supply chains which reduce the incentive for greening as businesses focus more on speed and ease of delivery, invariably using fossil fuels. So, there are challenges here as well. Of course, it goes without saying that global supply chains have a long way to go before they go green.
Last, the 21st Century business landscape is challenging and competitive and hence, governments and societal stakeholders have an important role to play in nudging and pushing businesses to go green. They can do so by subsidizing and incentivizing the businesses as well as by being like the Indian government which is embracing the Net Zero agenda with gusto and in the process, making businesses follow suit.
Climate change is no longer distant and is very real and here and now and so, the TINA or the There Is No Alternative to greening supply chains means businesses have to go green.
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