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By Brad Pace, Director, Emission Statement

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A Supply Chain Carbon Footprint allows companies to understand their current level of CO2 emissions per activity, and how changes to their network design will influence these emissions.

In this article
Supply Chain Carbon Footprint - An Overview
5 Business Reasons for Knowing Your Supply Chain Carbon Footprint
Climate Change and CO2 - The Basics
More Information
 

Supply Chain Carbon Footprint - An Overview

Greenhouse Gas emissions are universally regarded as the major contributing factor to climate change and global warming. As the world starts to experience the effects of these environmental changes, there are increasingly compelling environmental and financial reasons for understanding the level of carbon dioxide (CO2) equivalent emissions currently generated by your company.

For office based organisations, the level of these emissions can be calculated through an audit of energy use attributed to the business premises, flight travel and employee commutation. This can quantify your company's "Carbon Footprint".

For companies operating transport fleets or manufacturing businesses, or those dealing with raw material production, greater analysis is required. The total of these emissions is known as a company’s “Supply Chain Carbon Footprint”.

Transportation and storage of products around the world is a significant contributor to CO2 emissions. The non-household transportation sector alone contributed 8% of Australia’s total greenhouse emissions in 2004. This is in addition to the contribution of the fossil fuel powered energy that assists with the storage and production of these products. (ABS Yearbook 2007)

Analysis of a company supply chain’s current carbon footprint, along with the different storage and distribution strategies that may be recommended for reducing it, offer an opportunity for businesses to increase their competitive advantage in the marketplace. Such analysis often offers cost savings, but even if this is not the case, a true effort towards improving the environment will certainly be positively recognised by customers and staff alike.

5 Business Reasons For Knowing Your Supply Chain Carbon Footprint

EMISSION STATEMENT sees five compelling business reasons for understanding, right now, the extent of your supply chain's carbon footprint:

5. Excess Carbon Emissions = Excess Cost

Put simply, if your supply chain network is currently emitting more CO2 than it should through excess transportation, supplier inefficiency or overly energy intensive storage facilities, your company is not just producing excess emissions, but also creating unnecessary cost.

Even without factoring the environmental impact of your activities, the costs of energy such as fuel and electricity dictate that all supply chains need be as lean and efficient as possible. Cutting carbon emissions, if done correctly, should impact positively financially as well as environmentally on your business.

The use of energy (fuel and electricity) are large cost centres for most businesses. This will become increasingly so as oil reserves diminish and the cost of electricity increases as a result of government legislation impacting upon electricity generators. Knowing your current company networks' costs and emission outputs (your Supply Chain Carbon Footprint) is the first step to making positive changes for your business and the environment.

4. Carbon Offsets

Carbon Offsetting is the purchase of carbon credits from registered companies operating in forestry or other sustainable energy markets. This allows companies or individuals to offset their CO2 output against projects which provide a positive contribution to the current proliferation of greenhouse gases in the atmosphere.

Increasingly companies are looking to undertake positive activities towards cutting greenhouse emissions. This, however, may take time. One immediate way to positively contribute is through participation in such carbon offset programs.

Understanding your current Supply Chain Carbon Footprint enables companies to purchase the equivalent carbon offsets to make their supply chain a “nil contributor” to carbon emissions – whilst still following strategies to reduce their own emissions.

If not used in conjunction with a reduction strategy, these offsets will do nothing to improve the effects of climate change. But as part of a program of emission reduction, they are an initial way of showing a commitment to the fact that something needs to be done.

3. Carbon Trading

Carbon Trading is most commonly the term for a system allowing governments or regulators to impose a permit requirement for the emission of CO2. These permits are given to carbon producing companies, based on a fair and reasonable assessment of emission requirements of that company, and equivalent in total to the stated emission aims of the government itself.

Companies that then produce fewer emissions than that given to them in permits can sell these permits on the open market – thereby offering competitive advantage to companies that produce less carbon than expected. Companies that perform better than that which is imposed on them have a legitimate way to profit from their exceeding of expectations.

Carbon Trading is predicted to be operating in the Australian marketplace by 2010.(The Weekend Australian, Feb 10, 2007) Although this will largely centre on power generation companies in the short term, there is considerable debate about whether all companies should be involved – especially those with heavy involvement in the transportation sector.

Knowing your Supply Chain Carbon Footprint, and beginning the process of reducing this, will place companies in an advantageous position when carbon emission output becomes a tradable commodity.

With caps likely to be set at Year 2000 emissions levels, there are compelling reasons to understand your level of emissions immediately.

2. Your Customers, Staff & Shareholders

The proliferation of information regarding climate change has increased considerably in the past year. Given this, the demand for companies that are openly undergoing the process of positive contribution to climate change is expected to increase.

Customers want to deal with companies that have strong environmental credentials. The general public are beginning to see through "Greenwash" and expect companies to be making a real / measurable effort in reducing their environmental impact. Tenders and B2B Supply Agreements are also increasingly including environmental performance in their list of requirements.

Major retailers throughout the world are also increasingly expecting their suppliers to be actively putting the processes in place for the cutting of greenhouse emissions. The world’s largest retailer, Wal-Mart, has announced it will “push suppliers to make products that rely less and less on carbon based energy”. (Lee Scot, CEO Wal Mart, February 2, 2007)

Similarly, Employees want to work with companies that are not just seen to be doing something for the environment, but actually are doing something. In an increasingly tightening labour market, companies must look for ways other than remuneration to attract and keep valuable staff. Leaders in environmental performance are increasingly becoming employers of choice.

Finally, Shareholders are now looking for more than just bottom line financial performance. The emergence of triple line reporting dictates that companies that are sustainable, as well as profitable, are more attractive to investors.

For your customers, suppliers, staff and shareholders knowing your Supply Chain Carbon Footprint is imperative.

1. The Environment in which we live

Despite the large financial and business benefits associated with making positive efforts towards reducing your carbon footprint, the key reason for action on CO2 emissions is it’s ability to assist in reducing global warming , and the dire consequences that confront us if we are inactive.

Whilst understanding your company Supply Chain’s Carbon Footprint will not solve the problem overnight, it’s undoubtedly a positive contribution towards a huge problem.

Climate Change and CO2 – The Basics

Scientists have ascertained that the current period of global warming is almost certainly caused by human industry generated build up of greenhouse gases in the atmosphere.

These gases (of which CO2 is by far the most abundant) are created by the use of fossil fuels (such as coal, oil and gas) to create the energy required to power the earth’s homes, factories, warehouses, airplanes, trucks, cars, smelters and office blocks.

As greenhouse gases accumulate in the atmosphere, they trap heat that would otherwise be radiated away from earth, and in turn, have the ability to increase average temperatures across the globe. NACC/USGCP graphic

Evidence of the negative effect of the climate change caused by these greenhouse gas emissions mounts everyday. Prognoses of the effect of a continued global increase in temperatures include:

• The threatened extinction of many of the world’s animal species, including Arctic Polar Bears

• The bleaching and disintegration of coral reefs, including large sections of Australia’s Great Barrier Reef.

• An increase in natural phenomena such as salinity, water shortages, drought, cyclone and flood, and

• The continued disintegration of polar ice caps (see picture), generating higher water temperatures and subsequent rising of the world’s oceans to a point where many highly populated cities may be uninhabitable

(Source: The Weather Makers, Tim Flannery, The Text Publishing Company, Melbourne, 2005)

Emission Statement is now able to provide customers with a CO2 emissions footprint for current and future Supply Chain / Distribution network designs.

More Information

To discuss any of these services and initiatives, please call Brad Pace on +61 412 337 651 or This email address is being protected from spam bots, you need Javascript enabled to view it him.

Thank you to Emission Statement for providing this article.