Green is the New Black

Green is the New Black

A green supply chain places added emphasis on minimising resource consumption, creating zero or less wastage from processes and products, better energy management, and zero or less emissions in the entire cycle of supply chain activities.

Sustainability refers to the act or process of meeting our own needs without compromising the ability of future generations to meet their needs. Doing so requires a harmonious coming together of the environment, society and governing structures. A ‘green supply chain’ integrates product or process that creates zero or low pollution, waste generation and emissions, uses best natural resource management and supports mitigation of climate change.

The Pressing Need to Go Green

Global warming has caused an increase of the global surface temperature by about 1.5°C to 2°C, leading to climate change. The major contributor towards the global warming is human activity – and, if continued at the same pace, it could affect the life on the planet. The Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), managed by the World Meteorological Organization (WMO) and United Nations Environment Program (UNEP), states that the global warming thresholds of 1.5°C to 2.0°C will be exceeded during the 21st century unless there is a drastic reduction in emissions of carbon dioxide and other greenhouse gases in the coming years. Our current efforts are not sufficient to mitigate the effects of climate change.

We were warned about the effects of climate change a few decades back. Now, we have started to face the consequences of climate change – seen as frequent and severe events, ranging from flash floods, droughts, heat waves, wildfires, precipitation and tropical cyclones. It is critical that immediate, sustained and rapid action be taken to reduce greenhouse gas emissions in order to limit global warming. Failure to act now is likely to cause a rise of 2°C between 2040 to 2060, leading to more frequent cataclysmic events.

Currently, India is the third largest global emitter of greenhouse gases. This is due to irresponsible consumption, high pollution and poor waste management. In a recent study, the World Bank projected that India would lose 2.8% of its GDP by 2050 because of extreme weather, which would lead to a significant reduction in living standards. Also, the World Health Organization (WHO) indicated that, between 2030 and 2050, climate change is expected to cause approximately 2,50,000 additional deaths each year from malnutrition, malaria, diarrhoea and heat stress. According to the Food and Agriculture Organization of the United Nations (FAO), climate change is causing extreme weather, droughts, flooding and other disasters, depriving millions of people around the world of a livelihood. According to Global Climate Risk Index 2021, in 2019, India was the seventh most affected country by the devastating impact of climate change globally. As a result, talk about green supply chain is becoming increasingly common. Enhanced focus on fostering ‘green business’ is most relevant for business sustainability – and supply chain plays a vital role in many aspects for this. In fact, products and processes that are not aligned with the global green business requirement, especially with climate change mitigation, will no longer be considered in the market. This is the kind of pressure we are facing in markets across the globe.

Forming a Green Supply Chain

A supply chain includes the activities required by the organisation to deliver goods or services to the consumer. A green supply chain places added emphasis on minimising resource consumption, creating zero or less wastage from processes and products, better energy management, and zero or less emissions in the entire cycle of supply chain activities. It also holds the entire company responsible for the above, irrespective of the person handling the services for a product.

We play a dual role in this: One, as a vendor for our customers and the other as a customer for our vendors. As a vendor, we must stand by our commitment to creating a green supply chain; as a customer, we must demand the same from our all suppliers. To date, some of the decisions we made towards green procurement include recycled raw materials, star-rated energy appliances, energy efficient motors, paperless procurement process, and selection of sustainable packing materials. The materials used in packing is an opportunity to reduce material wastage as it will be greatly beneficial and save millions of trees annually.

There are three areas of work, namely Scope-1, Scope-2 and Scope-3. Currently, government and private organisations are targeting Scope-1 emissions, which accounts for fossil fuels burnt within a campus. Global communities have started to focus on Scope-2 as well, which is about the electrical energy purchased from outside. Scope-3 emissions focus on the emission from raw material processing till dispatch, including all activities performed within and outside the organisation. The organization’s entire upstream and downstream activities are covered up within this, including employees’ transportation, product transportation and emissions from suppliers’ operations with respect to these products and services.

To achieve Scope-3, we have to start by measuring emissions and spotting the main sources. Next, we need identify the potential reduction areas and plan for implementation. Finally, we need to report the emissions as validated by a third-party agency.

 The three-pronged ‘Reuse, Reduce, Recycle’ process plays a vital role in sustainable supply chain management. When we start to reuse materials, it reduces the demand and pressure on supply chain. We need to look for opportunities to get products and services made from recycled materials, wherever possible. Lean supply chain practices are one of the focus areas to reduce the eight types of waste, thus increasing the supply chain efficiency. Procuring the right quantity with the right quality at the right time is key to achieving the organisation’s sustainability goals. Another point is to have a centralised policy on sustainable supply chain with decentralised execution and administration.

Supplier goals should align with the business sustainability goals, so as to achieve ISO certifications, reduce emissions, reduce waste, restrict single- use plastic and use packing materials as per the local government guidelines.

Risk assessment and mitigation is important for the supply chain function, as change is the only constant in the market where the various stakeholders keep changing from time to time. For instance, mitigation shall be planned for the risk arising through the demand on fuel, water shortage and various stringent pollution control requirements.

Creating awareness and providing necessary training on green decision- making is needed to keep up the momentum. It is time to set sustainable supply chain as a business strategy, as it is also a key concern for all our stakeholders. The initial step is to measure the current level of sustainability in our supply chain. We will be trusted by our customers once we start to measure our compliance, since it will reflect on our commitment towards achieving our ambitious targets.

Climate change is one of the most significant development challenges facing humanity. We must aim to strengthen our response to the threat of climate change by setting targets on the reduction of greenhouse gases including short-term, medium-term and long-term goals and ultimately achieve a ‘Carbon Neutral’ status. As per the AR6, the only feasible route to control global warming is immediate ‘Net Zero’ commitment. At L&T Valves, we are committed to a ‘Net Zero’ future and our green supply chain will pay a huge role in the journey.