HARVARD BUSINESS REVIEW
OCTOBER 02, 2023
Every day, more organizations are joining the global effort to mitigate climate change by implementing ambitious sustainability initiatives and practices.
Many are embracing the framework established by the Greenhouse Gas (GHG) Protocol, a set of global standards that outlines three scopes to measure, manage, and reduce carbon emissions.
While many organizations tend to focus primarily on Scope 1, upgrading their internal infrastructure and processes, and Scope 2, reducing the output from the energy they purchase and consume, some struggle to meet Scope 3, reducing emissions across their supply chain.
“Many barriers have prevented businesses from decarbonizing, including a lack of awareness, a dearth of pragmatic tools, and limited access to resources and tools to design and execute their own effective decarbonization programs,” said Steve Wilhite, president of Schneider Electric Sustainability Business.
Zeigo, Schneider Electric’s decarbonization software suite, empowers users on their path to decarbonization. The software can help guide small organizations through the process of setting goals that are credible, reliable, and appropriate for their size and maturity. These organizations can use the software to build a customized roadmap and connect to an open marketplace of solution providers.
Larger companies are also finding their own paths to sustainable supply chains. Organizations in sectors including energy, manufacturing, and retail are devising innovative technology-driven solutions to address supply chain carbon emissions, including working with industry partners on programs that make it easier for suppliers to access alternative energy sources. This approach includes providing these partners with ready-made, easy-to-use software tools to reduce their carbon output and share progress with stakeholders and customers.
Supporting the Transition to Renewable Energy Across the Value Chain
With stakeholders that include raw material suppliers, drug manufacturers, wholesale distributors, pharmacies, and health care providers—all subject to high levels of regulation—the pharmaceutical supply chain is incredibly complex.
To simplify decarbonization efforts among their suppliers, major pharmaceutical corporations, including AstraZeneca, Novartis, and GSK, created Energize, an initiative Schneider Electric manages, to help suppliers overcome financial and operational barriers to decarbonization by aggregating purchases of renewable energy. This Power Purchase Agreement strategy streamlines the energy-buying process and enables smaller suppliers to take advantage of economies of scale. These programs help organizations initiate further access to renewable energy and create additional value from this shared aggregation.
Energize provides suppliers with access to Zeigo Hub, a user-friendly platform with built-in workflows and processes to help suppliers procure, track, and measure their renewable energy supplies and emissions. In addition, the program delivers critical training and education on relevant sustainable practices. More than 350 pharmaceutical supplier companies have joined the program, translating into 22.1 terawatt hours of electricity demand.
Reducing Emissions Across the Energy Industry
Across multiple industries, the emergence of digital products has helped drive the renewable energy transition. But the semiconductor manufacturing sector requires more resource-intensive processes than most, and its growing carbon footprint ironically offsets the key role semiconductors play in enabling clean-energy technology.
Intel and Applied Materials, in partnership with Schneider Electric, recently created Catalyze, the first program of its kind for the semiconductor industry, to help suppliers in the sector source clean power and engage in other decarbonization initiatives.
Similar supply-chain cohorts were born out of other Schneider initiatives, such as the Energize program, in the pharmaceutical value chain. Using a digital application, suppliers can easily learn about options to reduce emissions, choose the approach most appropriate for their company’s size and maturity, and create step-by-step plans to achieve their goals. The platform also provides clear real-time visibility into individual and collective progress toward goals and can analyze real-time data to help users estimate the amount and rate of future emissions.
Other energy companies are taking significant steps to cut emissions in their supply chain. With its Zero Carbon Project, Schneider Electric provides both Zeigo Hub and Zeigo Activate from the software suite to help suppliers measure their carbon emissions and use the information to identify and implement the most effective strategies to reduce them.
As the company’s top suppliers account for 70% of its upstream carbon emissions, the program will help Schneider Electric achieve its ambitious goal of cutting overall emissions in half by 2025.
Supply Chain Decarbonization Solutions Are Here
The distributed and fragmented nature of supply chains poses significant barriers to efficient decarbonization projects. But with new models providing a path toward achieving decarbonization across the global value chain, digital technologies are critical for providing suppliers with the tools and resources to establish and maintain their own carbon emissions initiatives, as well as collecting and analyzing data that can keep them on track toward achieving their decarbonization goals.
Climate change is accelerating, so efforts to decarbonize the supply chain must accelerate as well. By applying these innovative strategies and solutions, businesses across a range of industries can support a healthier environment now and in the future.