As global warming approaches record highs, more companies are pledging a range of sustainability efforts, whether it’s a shared global goal to cut carbon emissions or prioritize renewables, or efforts to reverse forest loss and land degradation. Let there be solutions.
But many companies are struggling to measure the true value of their sustainability and decarbonization efforts. a new study by Tata Consultancy Services (TCS) And microsoft cloud found.
The key, the study showed, lies in supply chain data.
The two companies analyzed data from 400 public companies in the energy, aerospace, automotive, high-tech, telecommunications, retail, transportation and other industries. The organizations in the sample had a total revenue of US$10 trillion.
The study found that 51 percent of companies were actively participating in the Dow Jones Sustainability Index (the top 10 percent of the largest 2,500 stocks in the S&P Global Broad Market Index based on their sustainability and environmental practices), while 52 percent reported Promoted climate action, with high levels of disclosure from manufacturing, energy, retail and consumer goods companies.
However, the study found that most of these companies struggled to validate data and insights from their supply chain emissions.
In fact, TCS’ sustainability data advisory work with clients globally has shown that Scope 3 (emitting emissions not controlled or owned by the company) categories such as procurement, packaging, distribution and logistics contribute to more than 80 percent of emissions. Are. Business of consumer goods.
However, only 11 percent of the companies analyzed have committed to science-based targets for carbon reductions in their supply chains.
Supply chain transparency, the study said, requires continued engagement not only with suppliers, but with all stakeholders in the business chain, to address concerns and share best practices.
Meanwhile, emerging regulatory pressures such as the Task Force on Climate-Related Financial Disclosures (TCFD), the Carbon Limit Adjustment Mechanism, and the Task Force on Supply Chain Laws in the European Union (EU) are increasingly forcing companies to track their supply chain sustainability. Are.
As a result, companies are looking to create “auditable” digital sustainability data accounting systems that cater to complex supply chains. Original equipment manufacturers (OEMs) are working with suppliers and vendors, setting goals to collect and share data on attributes such as climate risk, water stress, and the social impacts of their business activities.
To do this, businesses are working with technology companies, acting as edge-to-cloud transformation partners, to transform existing siled supply chain sustainability data into a single auditable source of truth. This information allows organizations to analyze and visualize emissions across the entire value chain of operations and set sustainability goals accordingly.
“Re-imagining global supply chains and using the latest technology and analytics is an important step towards more sustainable practices,” said Swati Murthy, director of strategic sustainability collaboration at TCS. “Therefore, strong strategic collaborations with hyperscalers are absolutely essential to rapidly share and scale up solutions, to bring together the latest decarbonization technology and expertise and make it accessible to all stakeholders in the business value chain.”
The study says that it is also necessary to address the skills gap to support the data transition.