Decarbonization barrier upstream in the supply chain amongst lower-tier suppliers - A case study of the IT-services sector
Examensarbete för masterexamen
Sustainable energy systems (MPSES), MSc
Shandilya, Rohan Sudhindra
Global warming and climate change have emerged as one of the greatest threats for ecological balance. The increase in global carbon emissions is the main reason for climate change. To address this topic, the Intergovernmental Panel on Climate Change (IPCC) has published comprehensive reports so that organizations can get a summary about the drivers of climate change, its impacts and reduction techniques. The latest report published in April stressed on the approach towards Carbon net zero to reduce the global greenhouse gas emissions if we must limit the earth’s temperature to 1.5°C. Carbon net zero is a holistic approach to reduction of carbon emission where all the actors in the supply chain are equally responsible for reducing their own carbon emissions. The IT services and consulting sector has a major contribution to the global carbon emissions since it works in synergy with other different carbon intensive sectors to run their operations. The current ESG policies include and govern suppliers who are responsible for the scope 1 and 2 emissions. Scope 3 emissions are all indirect emissions that are a released into the atmosphere and are a part of the value chain of the company. Scope 3 emissions are significantly rising across the globe and has been a major concern threatening the climate goals and proving as a hinderance to achieve carbon net zero. Currently, the major portion of emissions in a company’s supply chain occurs at lower-tier suppliers who are located upstream in the supply chain. The lower-tier suppliers often lie outside the visibility horizon and are not aware of the sustainability requirements of the organizations. Even if they do have an understanding, they are SME’s and do not have the budget to take up sustainable practices. They are usually located in countries where the regulations are not strict. It is extremely important that lower-tier suppliers are aware of the sustainability requirements and their role in managing their sub-supplier sustainability is critical for supply chain decarbonization for achieving carbon net zero.