Decarbonisation Technology - February 2024 Issue

Primary data sharing for supply chain decarbonisation Study to highlight the environmental impact across a product supply chain so substainability improvements can be implemented

Lavanya Pawar Carboledger

I n 2009, PepsiCo partnered with Columbia Earth Institute to initiate a comprehensive life cycle assessment (LCA) study, focusing on its flagship product, Tropicana (Evarts, 2012). The primary objective of this collaboration was to gain a deep understanding of the environmental impact across the entire supply chain for Tropicana and pinpoint areas where sustainability improvements could be implemented. The outcomes of the LCA study yielded unexpected insights. Contrary to prevailing beliefs within the industry, it was revealed that more than 90% of emissions associated with Tropicana stemmed from the use of fertilisers in the orange grove. This revelation stood in stark contrast to the assumption that a significant portion of emissions was confined within the boundaries of the company, primarily due to the utilisation of fossil fuels (see Figure 1 ). This study allowed PepsiCo to take significant steps to reduce its carbon footprint by replacing the fertilisers used at its farms. However, this example represents only a small portion of the work that was required to engage with partners in the supply chain who had no direct communication with the company. Riding the wave of market forces Over the past decade, significant strides have been taken in quantifying the sustainability of supply chains, turning it into a crucial element of the supply chain decarbonisation process. However, not every organisation possesses the resources and influence of a giant like PepsiCo, often relying on market dynamics to propel sustainability changes in their supply chain. Fortunately, contemporary markets are

compelling organisations of all sizes to embrace sustainability. While tethered to market forces for supply chain decarbonisation, it is crucial to recognise that these forces wield substantial economic influence. Consequently, interventions cannot adopt one-size-fits-all averages, irrespective of suppliers’ sustainability endeavours and geographical nuances. Take, for instance, two manufacturers utilising the same input materials but from suppliers in different locations – deciding how to decarbonise may demand tailored approaches. Similarly, if two suppliers in the same area utilise different energy sources, the manufacturer might need to incentivise one through green premiums or prioritise the use of renewable energy in their procurement decisions. Effectively tackling the decarbonisation challenge hinges on real data and specific supplier insights, avoiding reliance on broad industry averages.

90% of emissions stem from

sourcing activities

10% of emissions stem from company boundaries

Figure 1 Sources of emissions