Look to your supply chain data to measure carbon footprint: Microsoft-TCS study

As global warming reaches record highs, more companies are promising multiple sustainability efforts, whether it is shared global goals to cut carbon emissions or prioritise renewables, or measures to reverse forest loss and land degradation. 

But many companies are struggling to measure the true value of their sustainability and decarbonization efforts, a new study by Tata Consultancy Services (TCS) and Microsoft Cloud found. 

The key, the study revealed, lies in supply chain data.

The two companies analyzed data from 400 public companies in industries spanning energy, aerospace, automotive, hi-tech, telecom, retail, transportation and more. The organizations in the sample had a combined revenue of US$10 trillion.

The study found that 51 per cent of the companies were actively participating in the Dow Jones Sustainability Index (top 10 per cent of the largest 2,500 stocks in the S&P Global Broad Market Index based on their sustainability and environmental practices), while 52 per cent publicised climate action, with higher levels of disclosure coming from manufacturing, energy, retail, and consumer goods companies.

However, the study found that a majority of these companies struggled to validate the data and insights from their supply chain emissions.

As a matter of fact, TCS’ sustainability data advisory work with clients globally revealed that Scope 3 (emissions not controlled or owned by the company) categories such as procurement, packaging, distribution, and logistics contribute to more than 80 per cent of emissions for consumer goods businesses. 

However, only 11 per cent of analyzed companies have committed to science-based targets for carbon reduction in their supply chains.

Supply chain transparency, the study said, requires constant engagement, with not only suppliers, but also with all stakeholders in the business chain, to address concerns and share the best practices.

Meanwhile, emerging regulatory pressures such as the Task Force on Climate-Related Financial Disclosures (TCFD), carbon border adjustment mechanisms, and supply chain laws in the European Union (EU) are increasingly forcing companies to track their supply chain sustainability.

Consequently, companies are looking to create “auditable” digital sustainability data accounting systems that cater to the complex supply chain. Original equipment manufacturers (OEMs) are working with suppliers and vendors, setting targets to gather and share data on attributes like climate risk, water stress, and social impacts of their business activities.

To do so, businesses are working with tech companies, acting as their edge-to cloud transformation partners to curate existing siloed supply chain sustainability data into a single auditable source of truth. This information allows organizations to analyze and visualize emissions across the entire value chain of operations and set sustainability goals accordingly.

Screencap from TCS-Microsoft study

“Reimagining global supply chains, and using the latest technology and analysis, is a vital step towards more sustainable practices,” said Swati Murthy, director for strategic sustainability collaborations at TCS. “Therefore, it is absolutely essential to forge stronger strategic collaborations with hyperscalers to share and scale solutions faster, bringing together the latest decarbonization technology and expertise and making it accessible to all stakeholders across the business value chain.”

Addressing the skill gap to support that data transition is also necessary, the study noted.

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Jim Love, Chief Content Officer, IT World Canada

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Ashee Pamma
Ashee Pamma
Ashee is a writer for ITWC. She completed her degree in Communication and Media Studies at Carleton University in Ottawa. She hopes to become a columnist after further studies in Journalism. You can email her at [email protected]

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