Corporate America is embarking on the decarbonization of its companies and products. In a July 21, 2020 press release, Apple has committed to being carbon neutral across its entire business, manufacturing supply chain and product life cycle by 2030. Their 2030 goal is to reduce climate changing emissions by 75% while developing carbon removal technology innovations to eliminate the remaining 25%.
Microsoft has a zero-waste goal for 2030. They have pledged to stop using single-use plastics for the packaging of their primary products and IT assets by 2025.
Amazon announced this year its commitment to run on 100% renewable energy by 2025. A major step toward realizing this goal is their announced purchase of 100,000 all-electric delivery vehicles.
When I was starting out in business one of the truisms I quickly learned was that when the boss spits it floods downstream. The actions of Apple, Microsoft and Amazon are quickly being adopted across Corporate America. Their impacts will be a tsunami of green change for all B2B suppliers.
Supply Chain Impacts
Over a billion metric tons of emissions (equal to the combined emissions of Brazil and Mexico) would be saved if the suppliers of just 125 multinational companies increased their renewable energy consumption by only 20 percent. That is because supply chain emissions average about 5.5 times the direct emissions of the purchasing corporation.
The outsized emissions of Corporate America’s supply chain have now emerged as a top target for achieving corporate enterprise scale decarbonization. To that end, Corporate America is embarking on two strategies. The first is a carrot. Corporate America is redesigning their purchasing agreements to award contracts to more sustainable companies that are also competitive in price, delivery and quality. The second is a growing outreach to help companies reengineer their business practices and operations to be more sustainable.
Preparing Your Business to Win Green Supply Chain Contracts
It used to be that a business could demonstrate its sustainability commitment by doing marquee green projects that produced results but not enterprise scale change. Those days are over. Consumers are demanding enterprise scale commitments with sustainability engineered into the products they buy. Corporate America is now adopting these same expectations.
This means that CEOs/owners must be as focused on defining and executing sustainability metrics as they are profitability metrics. Stated bluntly, unless your business leadership steps up to being green then your business is on the slippery slope toward losing competitive advantage.
Here are four key green best practices gaining traction inside Corporate America that will position your business as a green supplier:
- Measure, report and improve. Sustainability is now performance driven. Just like any other aspect of your business the first step is to know where you are and what you have to do to win competitive advantage. To work with Corporate America, a supplier must know its numbers on key metrics like emissions and waste streams. And the supplier must be able to demonstrate numbers-driven actions plans that will drive toward zero waste and emissions.
- Share, repurpose, recycle and reuse inside a circular economy. One and done material use and packaging is coming to an end. The new economic model is circular. Materials, most especially plastics, will be repurposed, reused or recycled. Packaging will be reused. Green suppliers will win competitive advantage through their ability to provide circular economy solutions.
- Big vision implemented individually. Going green must be done on an enterprise scale that aligns management and work associates. Suppliers with a “green” culture will be proactively seeking disruptive changes that win competitive advantages. This will enable them to go to market faster with sustainable solutions and disruptive green technologies.
- A triple-bottom-line finance department. Historically, finance departments have been a huge barrier to implementing sustainability solutions. They typically classify sustainable investments as non-strategic. They limit green project funding by requiring at least a two-year financial payback. The key to winning competitive advantage will be re-engineering the finance function around triple-bottom-line metrics tied to people, planet and profits.
These practices will enable quicker and more strategic investments in the accelerating numbers of sustainable technologies that can reduce emissions and costs. For example, solar is now the least cost electricity generating technology. Batteries are on the cusp of being cost competitive while slashing electricity service disruption costs. LED lighting typically delivers one year or less financial paybacks through cost savings. Electric vehicles are now emerging into least cost competitiveness against fossil fueled vehicles over their life of operations. What’s not to like about saving money…and the planet?