As a non-profit platform, the Open Supply Hub team is used to writing funding proposals. This means we’ve also gotten pretty good at articulating why so many of the world’s problems are connected to supply chains. We frequently cite this powerful statistic in proposals: just eight supply chains are responsible for over 50% of global greenhouse gas (GHG) emissions.
Let that sink in for a moment. Out of all of the GHG emissions across the world, just eight supply chains are responsible for half of them.
This statistic emerged in 2021 in the report Net-Zero Challenge: The supply chain opportunity from World Economic Forum and Boston Consulting Group. Having cited it for a while now, we thought we’d unpack why tackling GHG emissions matters, what “The Big Eight” are, and why we know data is part of the solution.
Why Do GHG Emissions Matter?
The overarching goal of the Paris Agreement—negotiated in 2015 by world leaders—is to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.” To achieve this goal, it’s widely understood that greenhouse gas emissions must peak before 2025 at the latest and decline by 43% by 2030.
This is why so many governments and corporations are intensely focused on decarbonizing their operations and reducing their emissions.
Work done by the Greenhouse Gas Protocol has split emissions into three scopes, which are widely used and referred to the world over:
• Scope 1 covers the direct emissions from operations owned or controlled by a company, including onsite fuel combustion;
• Scope 2 covers the emissions that a company causes indirectly, e.g. from the usage of electricity, steam, heat and/or cooling purchased from third parties; and
• Scope 3 covers the emissions that a company causes indirectly across the entirety of its upstream and downstream value chain (e.g. from the suppliers the company buys from, and from customers purchasing the company’s product, including product disposal).
Ultimately, the vast majority of a company’s impact comes from Scope 3 emissions making it the critical tier to tackle, but also the hardest.
What Are The Big Eight?
So, which supply chains are having the biggest impact on GHG emissions globally? “Eight supply chains – from raw materials to end product manufacturing – account for more than half of all global greenhouse gas emissions. Food alone accounts for around a quarter – the most of any supply chain in the world. Construction has the next-biggest footprint, at 10% of global emissions, followed by fashion, fast-moving consumer goods (FMCG), electronics, automotive production, professional services, and freight.” — World Economic Forum report
Why are these supply chains producing so many emissions? Because raw material inputs from land use and heavy industries drive the majority of emissions, for example, if we think about agriculture in food supply chains, cement in construction, plastics in FMCG, and metals in automotive production. There are several reasons for this, the three key ones being:
1/ The sheer energy intensity of widely used input materials—like steel, other metals, cement and plastics—typically require substantial amounts of high-temperature heat;
2/ Many intermediary industries (specifically fashion and electronics) are located in areas with a very high emission energy mix, tilted more towards lignite, hard coal and oil than towards renewables or natural gas; and
3/ When we consider agriculture in particular, livestock grazing and other forms of cultivation are responsible for significant emissions of methane and nitrous oxide—both powerful GHGs.
In the three years since this report was released, the landscape will already have changed dramatically. Consider automotive production alone. With car fleets electrifying to address the larger downstream emissions of the sector, it’s likely that those carbon emissions will actually just have been transferred upstream to energy-intensive battery manufacturing instead.
What’s Data Got to Do with It?
“…decarbonizing supply chains is hard. Even leading companies struggle to get the data they need and to set clear targets and standards to which their suppliers must adhere. Engaging an often-fragmented supplier landscape is challenging – especially when emissions are “buried” deep in the supply chain, or when addressing them might require collective action at the industry level.” — World Economic Forum report
Identifying these challenges around finding the right data, finding the right collaborators, and finding upstream suppliers is refreshing to see. They’re challenges we hear daily and are, in many respects, our reason for being—because you can’t fix what you can’t see.
The report doesn’t only focus on problems but also outlines what it believes are the nine key actions that every company can undertake as part of their decarbonizing journey.
Create transparency
1/ Build a value chain emissions baseline and exchange data with suppliers
2/ Set ambitious reduction target on Scopes 1-3 and publicly support progress
Optimize for CO2
1/ Redesign products for sustainability
2/ Design value chain/sourcing strategy for sustainability
Engage suppliers
1/ Integrate emissions metrics in procurement standards and track performance
2/ Work with suppliers to address their emissions
Push ecosystems
1/ Engage in sector initiatives for best practices, certification, advocacy
2/ Scale up “buying groups” to amplify demand-side commitments
Enable your organization
1/ Introduce a low-carbon governance to align internal incentives and empower your organization
Open Supply Hub is powering the transition to safe and sustainable supply chains with the world’s most complete, open and accessible global supply chain map. It shows where global production locations are and who is connected to them and makes that data easy for anyone to work with. That’s why we’re energized by these recommendations—because we know that big issues like transparency and operating at an ecosystem level are what’s needed to change the status quo. And so we’re shining a light on three of the nine actions to illustrate what these recommendations could look like in practice, using a tool like OS Hub.
Build value chain emissions baseline and exchange data with suppliers
OS Hub as a solution: We’re delighted to be embarking on a new collaboration with Climate TRACE, launching in late 2024 and running throughout 2025. Our new data partnership will be a first-of-its-kind joint effort that will change the game when it comes to accessible emissions data for supply chains—follow us for much more on this exciting new venture!
Work with suppliers to address emissions
OS Hub as a solution: We’re increasingly hearing of use cases like this one from Sunrock, whereby companies disclosing on OS Hub are asking their suppliers (Tier 1) to upload their supplier list (Tier 2), and those suppliers are then disclosing their suppliers (the original company’s Tier 3), and so forth. This innovative use of the platform is helping companies to get deeper and deeper visibility into their supply chain so that they know who to work with to enable change, particularly around scope 3 emissions.
Engage in sector initiatives for best practices, certification, advocacy
OS Hub as a solution: A core part of our theory of change has always been that openly accessible data is needed for collaboration. Otherwise, no one knows who to bring into their initiative, to learn best practices from, or to partner up with on supply chain improvements. A couple of simple ways that the OS Hub platform enables this is through showing everyone that’s part of a production location ecosystem, the “draw a region” function, so you can collaborate with known organizations in a certain area, and the “find overlapping datasets” tool.
We know that this challenge to lower GHG is big and looks daunting. But this report gives us hope – firstly, by helping stakeholders to make strategic decisions (by understanding there are eight industries to focus on for the biggest impact) and, secondly, by knowing that a data-led approach is the best way. With the right tools, stakeholders, and information, we’re feeling hopeful and ready to be part of the solution.
OS Hub is a non-profit platform that relies on philanthropic support to sustain the world’s most complete, open and accessible supply chain map. Join us in powering the transition to safe and sustainable supply chains by making a donation today.
