Quickest Steps For A Green Supply Chain

Creating a more sustainable supply chain is in many ways, much easier for larger companies than for those smaller. The scale of the challenge is obviously bigger, but they have the financial margins, and procurement and ESG departments to do the work.

For owners of SMEs and small businesses, it is usually a case of DIY approach, or at least in part. So, it may be helpful to have a straight forward guide to the quicker ways to make the biggest positive difference to supply chain to save on carbon output, and in some cases, save on money. 

Switching To Green Energy 

Simply deciding to be more environmentally conscious when buying is a big step forward in itself. It leads to consistent actions, and one of the most significant is switching to a green energy tariff. A search for a competitive eco friendly deal does not take long, and can lead to savings on utility bills. It is one of the best ways for smaller sized businesses to reduce carbon footprint.   

Changing to Green Pensions

The other big thing that can be changed, and very often overlooked, is switching company pensions to green ones. It can produce better financial returns too. Environmentally friendly pensions did not used to have the best track record in terms of performance, but that has changed. Research last year by Morgan Stanley, found that median returns from sustainable funds averaged 6.9 per cent, while traditional pensions achieved 3.8 per cent.

It has been calculated that the average carbon footprint of a conventional individual pension plan results in 26 tons of carbon emissions in a year. This is because fund managers usually put a high proportion of investment into industry sectors involved in creating high levels of carbon, such as oil and gas. 

Not only does switching to environmentally focused pensions help to cut emissions, but it also channels large amount of investment into business projects that will provide the answers to achieving net zero.  

It is necessary to put due diligence into pension switching, or getting a financial advisor to do it, but it is one of the most significant actions small and medium sized companies can take to protect the planet. 

Buy Local

Buying local is planet friendly, which is fairly obvious. The shorter the journey from source to customer, the less carbon is created. Making a few enquires to find out the origins of purchase options is a simple process that enables informed decision making. 

It is also worth enquiring about the green credentials of suppliers themselves. It does not take much time to create a questionnaire to implement a simple scorecard assessment system. Ask suppliers half a dozen relevant set questions, and it is possible to gauge those that are making most progress on cutting carbon output. It may not be perfect, but the important factor is that it establishes a scoring system, and it can be amended over time.   

Scoring may not actually lead to wholesale switching to new sellers because purchasing is based on a variety of factors, but just asking questions prompts more environmentally friendly behaviour among suppliers. Some sustainability ‘experts’ recommend undertaking a detailed audit of supply companies to vet them for suitability, but in the real world of running a business, this is often not a realistic proposition. Considerable achievable progress can be made without it. 

Horizontal Collaboration

It is sometimes possible to cut carbon output by working with other companies to put in joint orders that reduce delivery journeys. This is sometimes called Horizontal Collaboration, which is a phrase created to describe talking with local companies to find out if they buy the same products at the same time, and if they do, placing collective orders. Personal contacts, and belonging to business networks enables the idea to be put to others to discover whether cooperation is feasible. In addition to saving carbon output, delivery costs are shared, at least to some degree, and it is sometimes possible to obtain discounts for larger joint orders. 

The Three Rs

The three Rs – Reduce, Reuse and Recycle - can be a useful motto when making buying decisions. Is it possible to reduce spending on particular products, can existing ones be mended or refurbished, and can future purchases be reused and recycled? Often the answer is going to be no, but sometimes there will be a yes, and every yes is another win for the planet. 

Transport 

For smaller business, transport is an area that usually does not take much thinking about when it comes to cutting carbon. The costs involved in transport, which are so heavily influenced by the price of vehicle fuel, have been so high for so long that nearly everyone has been trying to find ways to save money, including looking at hybrid and electric options. 

EVs may not be practical given the current limits to the distances they can travel without a recharge. It does not usually take much working out. It means hybrids are often the answer for some in terms of smaller vehicles. 

However, there is the opportunity to provide employees with company car lease EV deals, in which they can use tax break salary sacrifice to pay for them. This costs companies next to nothing, but is a great staff motivator and reduces carbon output. 

EV company leasing gives employees the opportunity to drive around in brand new upmarket saloons and 4x4 electric cars for a few hundred pounds a month, and smaller run arounds for even less. Plus, they can cash in their fossil fuel cars that are costly to run, and depreciate rapidly in value – the majority of petrol and diesel cars cost owners more than £6,000 a year in real terms. And given that a full tank of petrol or diesel costs in the region of £90 compared to £20 to charge an EV, then it is not surprising that employee EV leasing is a great staff motivator. It has also been shown to help retain and recruit the best talent.  

And on the subject of electric vehicles, if parcel couriers are regularly used, it is worth finding out if electric rather than diesel vans are used by them. A growing number have EV fleets, and are therefore a better option when it comes to harmful emissions.   

Ask employees

Anther practical way to revise supply chain for the better is to ask staff. They will know some aspects of the running of a business better than owners, and therefore have unique insight on some company functions.

Most employees will be pleased to make carbon saving suggestions, and in fact, research shows that contributing to the improvement of the environment through work is an increasingly important criteria for job satisfaction, even if it is not directly part of the job function. Consulting staff for ideas on supply chain can result in creating significant steps forward. A suggestions box scheme can be a good idea, with regular recognition given to contributors.  

There are other ways to reduce supply chain carbon output, but they are often complex, and require large amounts of investment and time – luxuries only available to companies in which economies of scale allow. Detailed carbon audits, measurement software programmes, and continuous detailed analysis are options. Marginal gains through this type of activity add up.  

For SMEs and small businesses, however, the basics provide achievable practical ways to move forward, and the opportunity to make cost savings in the process.