Pia Zevallos - Libélula General Manager
A company's supply chain is the sum of all activities for the production, shipment and distribution of the products generated, from the procurement of raw materials to final delivery to the consumer through suppliers. According to the report Jobs in a Net-Zero Emissions Future in Latin America and the Caribbean (2020) micro, small and medium-sized enterprises (MSMEs) in Latin America and the Caribbean represent 99.5% of the region's companies and generate 61.1% of jobs, but only 24.6% of total productivity.
The Organisation for Economic Co-operation and Development (OECD) estimates that SMEs account for between 60% and 70% of the industrial sector's GHG emissions, so they need to be integrated into the decarbonization strategies of the companies they serve. The report Big Challenges, Simple Remedies 2024 of the Carbon Disclosure Project (CDP), one of the world's leading sustainability reporting platforms, estimates that greenhouse gas emissions from a company's supply chain are 26 times more than emissions from its direct operations. This report also highlights the importance of incorporating the supply chain into carbon footprint measurements, considering that only 15% of organizations reporting to CDP have an emissions reduction target incorporated into their supply chain.
The Intergovernmental Panel on Climate Change (IPCC), in its Synthesis Report 2023, leaves a clear message: the world needs to be carbon neutral by 2050. To achieve this, greater efficiency in processes, a commitment to renewable energies and the involvement of suppliers are needed; this inclusion responds to the greater requirements of regulators and investors. In Latin America and the Caribbean, reporting of supply chain emissions is not yet mandatory, unlike in Europe, which, as of this year, with the entry into force of the Corporate Sustainability Reporting Directive (CSRD) will impact more than 50,000 companies, which will have to report the environmental and social impacts of their main supply chain. The other factor is investor behavior; in a survey conducted in 2023 by Robeco of more than 300 investors, 62% indicated that climate change is an important axis for their investment policies.
It is essential that companies integrate their entire supply chain into their strategies, including climate strategies. This involvement ranges from capacity building to sustainable sourcing criteria. In doing so, they not only amplify their impact, but also generate a powerful multiplier effect. This process begins when an organization works closely with its key suppliers, encouraging them to adopt sustainable practices but also accompanying them on their way to becoming more productive and profitable. In turn, these suppliers influence their own business partners, creating a chain of positive action. In this way, we can engage each link in the supply chain as an ally in the fight against climate change, while contributing to the productivity of SMEs and the generation of quality employment.
Published in Gestión Newspaper
