The race to decarbonise is in full swing and many businesses aren’t stopping at their own mess. Particularly at the big end of town, companies already well on the road to eliminating their own emissions are now culling carbon from their long chains of suppliers.
Some have even made express commitments to do so. Big tech is blazing the trail: Facebook wants a net zero “value chain” by 2030 and Apple has committed to a carbon-neutral manufacturing supply chain by the same year.
In Australia, the nation’s biggest miner BHP recently announced that it wants all its suppliers and shipping transportation to be carbon-neutral by 2050.
These companies are running fine-tooth combs through their supply chains and any supplier that’s belching emissions will be under high pressure to lift their game or face replacement by a leaner, greener competitor.
To complicate matters further, the European Union’s incoming tariffs on carbon-intensive imports will penalise companies reliant on polluting sources of energy that export into these markets. These tariffs are likely to become more widespread, as any country considering a price on carbon, such as the UK, China, Japan, Canada and parts of the US, will potentially implement a border price mechanism to protect its decarbonising companies from goods made in countries without a price on carbon.
The business case for green has never looked so good. For carbon-neutral companies the path forward is clear. Those enterprises that don’t act will be left behind.
We’ve been seeing this situation develop on the front lines of solar and renewable energy system design and installation, twinning carbon supply chain risk reduction with significant energy cost reductions.
For big energy users, the risk of losing business is now becoming the final nudge needed to install rooftop solar or procure renewable energy offsite. The business case for renewables was already robust but when lucrative contracts are on the line, it suddenly becomes a must-have.
For buyers, these supplier decisions are driven by more than goodwill. Businesses are concerned that suppliers hooked into traditional energy supplies are exposed to fluctuating energy prices that are only expected to get worse. If their suppliers are paying more for energy, these costs will be passed onto the buyer in the form of more expensive goods.
One of Smart Commercial Solar’s customers, a global tube manufacturer, has kept a steady stream of buyers coming through the door by going green. The company is a supplier of tube packaging for world-famous cosmetic and beauty brands. Beauty and lifestyle companies recognise the value of maintaining their social licence and are moving swiftly to reduce emissions in line with consumer expectations.
The company saw this trend coming a long time ago and wanted to insulate itself from these pressures by eliminating emissions in its packaging products. It now manufactures its tubes out of sugarcane-derived plastic (a renewable resource) and recycled plastic. The operation is powered in part by a large solar array to supply renewable energy. Any remaining energy it can’t source from the onsite system is offset at its very own agroforestry plantation near Canberra.
This offsetting opportunity has brought many sustainability-conscious beauty brands knocking on the manufacturer’s door. New markets and new kinds of customers are also interested.
We’re moving into an era where sustainability initiatives such as installing rooftop solar offer more than a dip in operating costs and a feel-good solution. These initiatives are actually insurance against supply chain risk – good for governance, good for commercial viability long-term and good for the bottom line.
Doing the right thing today will pay dividends for the future.