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Developing Greener Supply Chains

Sectoral report, Clean growth

Delivering net-zero emissions will require a significant economic transition and increased focus of both government and businesses. Reducing supply chain emissions will be critical. You can find our Developing Greener Supply Chains animation here

This is the first in a series of insight papers which aim to evaluate the role of industrial polices in delivering a productivity enhancing, inclusive, transition to net-zero. It will also help to inform policy for a green recovery. This paper explores;

  • Business motivations for supply chain greening  - developing greener supply chains can offer commercial as well as environmental benefits. Responding to customer demand for sustainability and safeguarding against climate-related risks can retain or expand market share and avoid reputational damage.
  • Short and long-term challenges facing supply chains - Covid-19 led to the temporary closure of many firms and international markets, culminating in shortages and delivery delays. Decades of integration of UK businesses with the EU has contributed to complex supply chains. Extreme weather events pose risks in terms of supply chain disruption, quality of inputs, and transportation. 
  • Recent developments supporting green, resilient, supply chains - Smart and autonomous systems and better data and tracking can optimise parts of the supply chain and deliver greater transparency to consumers and investors. Specialised technologies can improve energy efficiency and reduce emissions.
  • Where progress has been made and what more can be done - Many business leaders have announced commitments to become carbon neutral. But strategies and practical steps to reduce supply chain emissions are currently lacking.  
  • Despite the positive developments and opportunities highlighted, progress is not being made fast enough. This paper proposes:   
    • Business leaders publish commitments and metrics to reduce their supply chain emissions on an annual basis. 
    • Investment in the knowledge and skills needed to deliver greener supply chains is scaled up significantly.
    • Made Smarter technology adoption support, which is currently only available in the North West, should be scaled up to help improve SME supplier competitiveness and reduce emissions, as should the Manufacturing Made Smarter Industrial Strategy Challenge Fund from the current £147 million to boost supply chain innovation.
    • Behavioural change across the economy needs to underpin the above, facilitated by aligned incentives which value natural capital appropriately and increase adoption. 

Jayne-Anne Gadhia, Industrial Strategy Council and Steering Group member said: 

While the carbon neutral commitments made by businesses to date are positive, a sizeable share of these have yet to develop a net-zero plan, and even plans are insufficient. Businesses need to convert plans into actions and be held to account in doing so, if we are to achieve the scale and speed of progress required.’ 

 Rupert Harrison, Industrial Strategy Council and Steering Group member said: 

‘Providing finance and aligned incentives will be instrumental in driving the low carbon transition. Consistent and transparent reporting, published annually using globally accepted metrics like the TCFD recommendations, is needed to direct investment towards more sustainable and resilient businesses and activities.’ 

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