Update 2026: Omer Bakkalbasi wrote this post in December 2015, shortly after the Paris Agreement was adopted on 12 December. His text below is unchanged. The emissions shares he cites come from a US EPA page on 2013 emissions, linked here as an archived copy, and the targets are the ones discussed at the time. For climate change supply chain planning today, two newer posts go further: five steps for building a lower carbon supply chain plan and network design that weighs total cost to serve against CO2.
With climate scientists and negotiators from 190 countries recently announcing a landmark deal to cap the rise in global temperatures to well below 2°C from pre-industrial levels, now is a good time for everyone to start thinking about what the deal in Paris will mean for their businesses.
For supply chain managers, our contribution to climate change, the impact of climate change on our supply chain operations, and our responsibility to do something about it can no longer be ignored:
Why Climate Change Matters for Supply Chain Planning
- With approximately 45% of total CO2 emissions caused by the production and transportation of goods, supply chain managers have a direct responsibility to make their operations efficient, cleaner and planet-friendly. No meaningful reduction in global emissions can be fathomably achieved without supply chain managers taking our fair share of responsibility for this issue.
- As a great example of today’s interconnected world of commerce, insurance giant Allianz recently announced that losses due to business interruption claims have overtaken property damage losses due to the proliferation of lean, global and interconnected supply chains. The increasing frequency and severity of climate disasters caused by global warming across the planet means supply chain managers not only have to build more resilient and risk-tolerant supply chains, but have a responsibility to minimize the rise in global temperatures.
What the Paris Deal Means for Emission Targets
- The deal in Paris means developed countries in North America and Europe have to cut emissions by at least 30% – 40% from 2005 levels by 2030. To that end, legislative initiatives will likely begin to mandate emission targets for different industries that supply chain managers will need to start adhering to. All this means that lowering CO2 emissions from your supply chain is no longer just a pet project of your Prius driving CEO, but something that could very well start affecting the compliance and the bottom line of your business.
How to Start Lowering Your Supply Chain’s Carbon Footprint
So what is a supply chain manager to do?
Begin by building a baseline understanding of your current supply chain’s carbon footprint. Take the maxim “measurement leads to improvement” for your supply chain’s CO2 emissions and begin to track, model and build operating constraints around it. Look at innovative technology for energy sources and transportation modes, and make pro-active changes that can help you lower your business’ carbon footprint. For more ideas and details on what you can do, check out the next blog in this series.
Our community of supply chain managers, thinkers and technology providers has transformed supply chain operations over the last twenty years making them leaner, faster and more cost efficient. Our collective analytical horsepower and tools can no doubt help us build a more planet-friendly supply chain and we have a professional, personal and ethical responsibility to start doing it now.
You can read Part II – Glasgow 2021
How Solvoyo Puts CO2 Into the Plan
Solvoyo is a supply chain decision automation platform. In its strategic network design models, CO2 is an objective next to total cost to serve and service, with emissions from built-in carbon footprint calculators, so a planner can compare a cheaper network against a cleaner one before committing to either. The sustainability page shows how the same idea carries into inventory, production and transport planning.
Frequently Asked Questions
It reaches the plan in two ways. Extreme weather disrupts suppliers, ports and routes, so plans need buffers and alternative scenarios. Emission targets also apply to the supply chain itself, so CO2 has to be measured and planned like cost and service.
The agreement, adopted in December 2015, set the aim of holding warming well below 2°C above pre-industrial levels. Countries meet it through national targets and rules, which turns supply chain emissions into a compliance and cost question as well as a reputational one.
Start with a baseline of current emissions by site, lane and mode. Track it as a planning metric, then add it to planning models as a constraint or a cost so the trade-off against cost and service is visible before decisions are made.
