COP29 Shows Supply Chain Leaders Need to Take the Reins on Climate Action – Now

COP29 recently wrapped up a contentious two weeks in Baku, Azerbaijan. The expected outcome of this annual forum was a financial agreement requiring wealthier nations to contribute funds so developing nations could further invest in green energy and emissions reduction.  

Though billions were pledged, we’ve still come up short. 

Sorely Lacking

The final agreement sees the richest nations pledging up to $300 billion per year, however, many experts contend this agreement will not be nearly enough to meet the estimated $1.3 trillion in costs to meet the emissions targets by 2035. As Panama’s special envoy Juan Carlos Monterrey put it, “This process was chaotic, poorly managed, and a complete failure in terms of delivering the ambition required.”   

On top of current dissatisfaction with the final sum, many are assuming that President-elect Donald Trump will withdraw the United States’ participation in the final commitments, further undermining event agreements.  

While many did not expect major progress from COP29 given the lack of engagement by top emitters (Joe Biden, Xi Jinping, Emmanual Macron, and Narendra Modi all sat out this year’s talks), the major shortfall in funding, growing division between developing and developed economies, and a backtracking on COP28 language that seeks to phase out fossil fuels shows this annual forum is disappointing. And when politicians fall short, industry needs to take charge. Supply chain, responsible for up to 60% of carbon emissions globally, is ideally positioned to take the reins.  

Good for the Planet, Good for Business, Good for Supply Chain 

Leading the charge on climate action is good for the planet. But it’s also good business sense if you consider the following factors:   

1. An evolving regulatory landscape – as legal requirements and policies shift (we found that climate-related laws and possibilities have risen 4x in the last decade), many companies operating in Europe or California in the next few years will need to be able to track and report their emissions footprint as part of their license to operate.

2. The need to build resiliency into operations – in industries such as agriculture, a changing climate presents outsized risks to crop yields impacting our ability to feed the world. Companies like General Mills engage in practices like regenerative agriculture; these practices can mitigate short-term risks by improving soil health while reducing emissions in the long term. 

3. Being the customer of choice – as more companies begin to build carbon emissions tracking into their operations, they will look for their partners and suppliers up and down the supply chain to do the same. Conversations with the Zero100 Community reflect the view that having measurable targets and readily shared emissions data will become a differentiator.  

The Time for Action

There’s no one way to move forward on this front. But our research shows companies like Walmart and Puma are taking a multi-pronged approach, which could involve:  

• Setting targets using a validated certifying body like SBTi over a horizon of at least two years. Studies show that companies with a sustained target over a multi-year horizon correlate directly with emissions reductions.  
• Creating a formal supplier engagement program. 84% of all industrial emissions are indirect (ie, Scope 3), meaning they are generated upstream or downstream along the supply chain. To capture and reduce them requires close partnerships with those suppliers, vendors, and third parties that contribute to a product’s emissions during its lifecycle, much like Walmart has done with Project Gigaton.  
• Incorporating incentives. The existence of financial incentives dependent on sustainability progress can be a major predictor of action, with companies like Mars linking up to 20% of executive compensation with its sustainability goals to spur action and cross-functional buy-in.   
• Speaking of financials, using an internal carbon pricing model allows organizations to factor emissions reduction into the capital management process and generate a measurable ROI. Our research found that one large industrial manufacturer set aside a $100m annual fund for this purpose. 
• Investing and progressing on digital. Our research found that companies leading on digital hiring are 27 percentage points ahead in meeting their Scope 3 emissions targets compared to their less digitally savvy peers. 

In our turbulent geopolitical moment, industry has the chance to be the stabilizing force the planet needs to prevent catastrophic impacts from a warming planet. Supply chain leaders are in the driver’s seat – it's time to take action.