Looking at environmental performance across the supply chain
Brussels December, 20th 2016
The environmental impact of business activity is often mistakenly limited to the direct operations of companies. In reality, it is the environmental performance of the supply chain as a whole that needs to be looked into, writes Christian Ewert.
Christian Ewert is director general of the Foreign Trade Association (FTA).
The latest round of global climate change talks — COP22 — should have been a celebratory affair. The historic Paris agreement on climate change had been ratified well ahead of schedule.
However, the US election results cast a cloud over the summit in Marrakesh last month. While it remains to be seen whether President-elect Donald Trump will actually proceed with his vow to take the US out of the agreement, his recent move to appoint Scott Pruitt, a known fossil fuel defender, to head the Environmental Protection Agency is cause for concern.
No country alone can solve all the problems related to climate change, but losing a key player could have seriously negative effects.
Climate change poses an unparalleled, complex and urgent challenge to us all. Global businesses and their sustainable practices have a huge role to play in tackling this challenge. It is therefore encouraging that at the COP22, parties reaffirmed their commitment to implement the Paris Agreement.
Even prior to COP22, several significant climate change deals were achieved. Early in October the much-awaited aviation climate deal was agreed in Montreal, adopting an offsetting approach to constraining aviation emissions. Starting from 2021, airlines that have opted into the measure will have to purchase offsets to balance their emissions growth above 2020 levels.
Only a few weeks later, the Montreal Protocol on Substances that Deplete the Ozone Layer was amended, aimed at reducing the emissions of hydrofluocarbons (HFCs). HFCs are used as substitutes for ozone-depleting substances (CFCs and HCFCs) in mainly refrigeration and air conditioning. Since it has become clear that they are not only some of the most powerful, but also the fastest growing greenhouse gases. Reducing emissions of HFCs could prevent up to 0.5°C of global warming.
With the Paris Agreement in place as a policy basis, more and more companies are setting science-based emission reduction targets that will impact many areas of their business operations. One area with significant carbon emissions is supply chains. Some 25 percent of total global emissions are ‘embodied emissions’ in exported products, which are emissions from the sourcing of raw materials, manufacturing of products and pre-export transportation.
For this reason, while discussions focus on the need for legislative frameworks and more public-private partnerships, these messages must cascade down the supply chain to reach local producers. All businesses — from SMEs to multinationals — have a vital role to play in this process. Their environmental impact is often mistakenly limited to that of their direct operations.
However, the indirect effect of a company’s global sourcing activities — which generates the largest impact on the environment — tends to be overlooked. Taking into consideration the environmental performance of the supply chain as a whole requires collaboration and transparency. Initiatives such as the Business Environmental Performance Initiative (BEPI) are supporting companies in this undertaking, by offering a unique system applicable to all sectors and countries as well as tailored recommendations to improve their producers’ environmental performance.
The BEPI System covers a comprehensive set of 11 environmental performance areas, including Energy Use/GHG and Emissions to Air. BEPI supports its members on driving reductions in emissions directly into their supply chains through awareness raising, capacity building and practical improvement activities. Every reduction in greenhouse gas emissions will contribute to the collective effort of keeping global warming well below 2°C.
Important though the environment is, we cannot envisage a truly sustainable future without considering the protection of human rights, many of which depend on the fulfilment of other rights such as that of safe and healthy working conditions.
The Foreign Trade Association’s sustainable supply chain management services, which bring together BEPI and the Business Social Compliance Initiative (BSCI) — supporting members with programmes to reduce social impacts in their supply chains for nearly 15 years — provide an effective framework to address these intertwined and pressing challenges.
Yet, understandably, one may think that the challenge can be to convince businesses in these financially challenging times that sustainability is a must rather than a nice-to-have. However, nothing is further from the truth.
Numbers speak for themselves: FTA’s 1,900+ members and over 41,000 factories and farms worldwide working together to promote more sustainable business practices show the strong commitment of the business sector, from multinationals to SMEs, to tackle these challenges.
We’re looking to the future – for the planet and people living on it, and also for businesses. The value that sustainability adds to a company’s bottom line may not be immediately apparent, but we strongly believe that it is essential for their long-term success and the overall growth, development and economic prosperity.
As elections take place across Europe and a Trump administration begins its work, we will fight to make sure these values continue to be a top priority.