The conversation around Supply Chain and COP26

Both the stakes and the expectations for the COP26 climate summit in Glasgow are higher than ever before. Countries need to align on the operationalisation of the 2005 Paris agreement, which implies doubling down on emissions reductions targets for 2030 and 2050, on adaptation actions for communities and natural habitats, on financing efforts by developed countries, as well as on strong collaboration between governments, businesses and civil society.

Regardless of the outcomes of the conference, businesses will need to accelerate climate action in an unprecedented way to deliver on overarching country-level commitments. Currently, the world’s listed companies are on a 3°C pathway, with less than 10% of them aligned with the Paris Agreement target for an increase in global temperatures of no more than 1.5°C . Thus, businesses have both a great responsibility and opportunity when it comes to supply chain decarbonisation. Given that on average more than 90% of value chain emissions lie outside a company’s direct control (i.e. within its Scope 3 emissions), collaboration along the value chain and across industries is the only way to address corporations’ climate change commitments and other equally important sustainability issues.

Key topics in this report include fossil fuels and the need for divestment, access to affordable energy and the lack of financing by developed economies, pollution and the impact of WHO’s updated global air quality guidelines, and the loss of biodiversity and role of circularity in addressing the problem.

While climate action continues to dominate conversations, the topics of social impact, biodiversity and supply chain have gained the highest increases in perceived importance in the past weeks.

Restricted supply, shortages of critical materials and components (for example of electric vehicles, batteries and components for wind and solar installations) as well as a lack of supply chain transparency are mentioned as the top three challenges in the context of supply chain decarbonisation. The first two call for more geographically diversified, digitalised and agile supply chains; the third confirms that both regulatory and consumer pressure for more sustainable products (enabled by more reliable carbon footprint data) is being propagated up the value chains.

Beyond climate change, the themes raised by stakeholders all relate to systemic and interconnected environmental or social issues. Business leaders might consider some of them remote or indirect, yet it is paramount that they courageously step up, take ownership and join forces in order for any COP26 goals to be achieved in the needed time frame.

Monitoring the pulse of these conversations during and after COP26 will reveal how the above trends are evolving. This will be the subject of an upcoming article.