For the past two decades, this industry analyst has devoted a career toward being an observer of industry and global supply chains, specifically the business strategies, processes and technologies that drive industry supply chain strategies. My passion is in understanding what motivates supply chain management strategies and how they impact business outcomes and I continue to share such insights on this Supply Chain Matters blog.  Paris_COP21

I recently came to a realization, that the recent ground breaking COP21 Agreement on stemming global climate change provides both a profound call to action as well as a significant opportunity- an opportunity for bolder collaboration and joint goal-setting to not only address greenhouse gas reduction imperatives and to saving our planet, but the imperative of sustainable business itself.

It literally should change our perspectives and goal-setting for sustainability strategies surrounding industry supply chains, moving such initiatives beyond functional to line-of-business level efforts.

On December 12, 2015, 195 nations became parties to the Paris Climate Agreement, commonly referred to as COP21. The implication of COP21 is an explicit declaration by a majority of nations that the existence of climate change and heightened greenhouse emissions provides global risk to our planet.  The agreement focuses and commits the signing nations towards a common goal for holding the increase in global temperature below 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, and to pursue efforts to limit temperature increase to no more than 1.5 degrees Celsius. Overall this agreement is being viewed as a turning point in the challenge to contain global warming and its current effects on the environment, weather and climate changes.

Keep in-mind that this effort was primarily brought about by the influences of private industry, and from a nation’s perspective, the United States and China, two of the three largest economies. COP21 sends a clear message that much of the globe’s remaining reserves of crude oil, coal and natural gas must stay in the ground in order to meet and alleviate the stated temperature rise objectives.

Think for a moment on how much of our past and current industry manufacturing and chain strategies have been driven by fossil fuel availability, consumption and cost?

 

Scientists point to three sectors that are most critical toward reduction of GHG emissions:

Energy- the engine and most influential cost aspect of global business and of industry supply chains represents upwards of 30 percent of global CO2 emissions. Throughout modern history, the cost of energy and fuel has been the principal driver of a majority of industry, manufacturing, distribution and global supply chain strategies. Reduction opportunities reside in the consumption of alternative and low carbon renewable energy sources, smarter and far more efficient energy and logistics utilization practices.

Agricultural, Land Use and Forestry Practices account for an additional 30 percent of global-wide emissions. With world population growth expected to reach 9 billion people by 2050, our planet cannot tolerate an unsustainable food production system. Farming practices, fertilizer, water use, animal husbandry all add to considerable emissions.

City Infrastructure, Buildings and Transportation can be responsible for upwards of 40 percent of global emissions. More of the world’s population is expected to be concentrated in larger cities, (mega-cities) and thus will be the hubs for economic growth, commerce and delivery and fulfillment logistics. The potential of smarter, more connected cities coupled with advances in more sustainable, renewable energy sources provides the opportunity for a complete re-thinking of urban logistics and transportation. Global trade must now stem from advances and efficiencies in global, regional and local transportation networks.

In order to address these three imperatives, more and more organizations have discovered that the firm’s supply chain can be responsible for up to four times GHG emissions beyond that firm’s direct in-house operations.  Industry supply chains are therefore one of the most critical areas of opportunity to enable GHG reductions and climate chain resilience.

In April, I delivered an Accenture Academy Trend Talk presentation that addressed what I believe is a broader opportunity for global and industry supply chains to elevate sustainability efforts towards a broader dimension of sustainable business.

With the era of COP21, industry supply chains are presented the opportunity to seize upon the tenets outlined in Jeremy Rifkin’s book, the Third Industrial Revolution as well as other thought leaders that point to the compelling convergence of technologies that are before us. One that leverages the convergence of green and renewable technologies, new more renewable energy sources, the Internet of Things and the Digitization of Manufacturing, all of which are converging over the not too distant future. It can foster insured business continuity through strategies that are directed at long-term sustainability of commodity, raw material and natural resource supply.

Subscribed members of Accenture Academy can view the full recording of my April TrendTalk presentation at this Accenture Academy archive web link. (Paid subscription and login required)

I also encourage reader feedback regarding current initiatives addressing supply chain wide sustainability initiatives. What’s working and why? What’s getting in the way?  Do you believe, as I, that supply chain efforts can be elevated to those of sustainable business with C-Level leadership? Share your thoughts in the Comments section associated with this posting.

Bob Ferrari

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