Tough Choices In Decarbonization: Why Firms Are Prioritizing Emission Profiles Over Supplier Loyalty

Tough Choices In Decarbonization: Why Firms Are Prioritizing Emission Profiles Over Supplier Loyalty

The 2024 Verdantix global supply chain decarbonization survey highlights the growing importance of tangible decarbonization, showing progress on aspirational net zero targets. The survey results provide benchmarking data for supply chain decarbonization software and services suppliers, allowing them to align product strategy with the evolving demands of buyers. The analysis is underpinned by data collected during 250 phone interviews that Verdantix undertook with sustainability and supply chain executives, spanning organizations across 33 countries and 10 industries. Verdantix finds that firms are:

• Prioritizing initiatives to reduce product carbon emissions.
  Respondents interviewed in the survey believe that the most significant driver for investments to reduce emissions in the last 12 months was informing initiatives to reduce product carbon emission, which was cited 19 percentage points more frequently than any other option. The results suggest firms are now focused on actively reducing emissions, rather than claims-making and compliance. In the past five years, many organizations have been stung by misleading product claims and over-ambitious reduction targets, and it appears firms are now more cautious of this risk. Instead, decision-makers favour tangible decarbonization initiatives that can show progress on net zero targets and avoid greenwashing claims.
  
  
• Now more willing to compromise supplier relationships to reach decarbonization targets.
  The survey results reveal that 42% of firms have already discontinued a relationship with a supplier due to its emissions profile. Increasing supply chain maturity means that some organizations are able to make discrete supplier-to-supplier decisions across their value chain based on emissions profiles, leading to decarbonization in their supply chain. Firms’ willingness to compromise business operations in favour of sustainability initiatives highlights a shift in sentiment towards decarbonization, as sustainability teams look to satisfy internal and external stakeholder pressure.
  
  
• No longer viewing budget constraints as a key challenge to improving supply chain sustainability.
  Traditionally, budgets for sustainability initiatives have been fought over ferociously by sustainability leaders – but just one in 10 respondents currently see limited budgets as the most pressing issue to improving supply chain sustainability. The results suggest that supply chain decarbonization is not an issue that money can easily fix. For some firms, it is not currently possible to throw money at their supply chains to reduce emissions, as the technology does not exist to buy, or the supply chains themselves are too complex even for large budgets to decarbonize.

To gain a deeper understanding of budgets, priorities and tech preferences in supply chain decarbonization, read the 2024 Verdantix global corporate survey.