Major firms fail to disclose supply chain emissions goals

09 March 2023 4 min. read

Most of the world’s major firms are failing to make public science-based emissions targets. A new study suggests that just 11% of the world’s largest companies have currently disclosed their plans.

In the seven years since the first signing of the Paris Agreement, many businesses have launched net zero targets referencing the historic accord. However, a growing number of studies suggest that not only are most firms set to miss their own targets in the coming years, many are not backed by independent scientific evaluations. In that case, even if firms did hit their targets, there would be a chance that they would not meaningfully reduce their emissions in a way that would slow climate change.

In order to ensure those targets are effective, and to prevent ‘green-washing’, establishing them as ‘science-based’ has become crucial. However, a new study from Microsoft and Tata Consultancy Services (TCS) suggests that 84% of major firms have yet to set public science-based targets to reduce direct operational emissions from their supply chains.

Prowess in managing sustainability imperatives

The Science Based Targets initiative (SBTi) is an international global body enabling businesses, formed to evaluate the ambitious emissions reductions targets set by companies, to ensure they are in line with the latest climate science. As well as independently assessing and approving targets, it also offers guidance to reduce barriers to adoption.

The research from TCS and Microsoft is the latest in a long line of studies which suggest companies are failing to validate their data and accurately measure their decarbonisation efforts. According to the analysts, this highlights the importance of regular engagement with extended business ecosystems, including customers, suppliers, and other stakeholders, to improve supply chain transparency and reduce carbon footprints.

Swati Murthy, Director for Strategic Sustainability Collaborations at TCS commented, “Our findings make clear how much innovative work remains to be done to make global business sustainable – and how critically important it is to engage with an extended ecosystem that involves all stakeholders – including customers, consumers, suppliers, service providers and policymakers.”

Sustainability prowess

This is particularly important when it comes to evaluating the emissions of a firm’s supply chain. Indirect scope 3 emissions can account for more than 95% of a company’s emissions, yet fewer than one-quarter of organisations are well informed on the emissions sources in their supply chain. Evaluating major firms around the world on this basis, TCS and Microsoft companies valued at more than $1 billion a score from zero to ten for their prowess in managing sustainability imperatives.

This score was based on four dimensions: shareholder value measured by the Dow Jones Sustainability Index;  demonstrated climate resilience measured through initiatives that track and manage carbon emissions in real estate; supply chain resilience based on Scope 3 carbon emissions; and water resilience demonstrated through the ability to manage water-related risks and opportunities. With only 11% of major firms presently disclosing science-based targets for reducing emissions in their supply chains, the majority of firms rank in the lower end of this index.

Murthy added, “Reimagining global supply chains, and using the latest technology and analysis, is a vital step towards more sustainable practices. Therefore, it is absolutely essential to forge stronger strategic collaborations with hyperscalers to share and scale solutions faster, bringing together the latest decarbonisation technology and expertise and making it accessible to all stakeholders across the business value chain.”

With collaboration key to unlocking the potential of green transitions and mitigating the environmental and social risks firms face, numerous consulting firms are ramping up their capacity to advise on science-based targets for their clients. Recently this saw Accenture add London-headquartered Carbon Intelligence to its sustainability service line, while Boston Consulting Group acquired Quantis, and in 2021, rival McKinsey & Company closed three sustainability-focused acquisitions.