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Supply chains, which account for 80 percent of the world’s total carbon emissions, would require as much as $100 trillion of investment if they are to become net-zero emission by 2050, new research by HSBC and Boston Consulting Group (BCG) showed.
BCG and HSBC teamed up to understand what it will take for global supply chains to most effectively transition to net zero. The analysis found that $100 trillion is needed, of which between $25 trillion and $50 trillion will need to be directed to small and medium-sized enterprises (SMEs).
While separate organizations and companies are racing to pledge net-zero emissions across their operations, they have not done enough to address the indirect emissions from their suppliers, the paper noted.
“The challenge is not only a matter of cost or technology. It involves changes in business models and organizational culture. SMEs need incentives to move toward a smaller carbon footprint, resources to cover the costs, training to make it work, the technological platforms to help them overcome hurdles,” HSBC and BCG said in the report.
“Despite the positivity of increasing numbers of large corporates making net zero commitments, the reality is that delivering on ‘Scope 3’ [supply chain] emissions will be extremely challenging unless urgent action to support SMEs is taken now,” says Natalie Blyth, Global Head of Trade and Receivables Finance at HSBC.
The research offers a seven-pillar transition map which includes steps to rethink product design, embrace collaboration, build the capabilities needed for change, invest in climate tech, develop better data structures, think about policy and standards holistically, and enable financing.
“We understand more and more about the ‘why’ and ‘how’ of enabling net zero supply chains. But we cannot afford to lose sight of the third critical factor: the ‘when’. The pace of change is incredibly important, and the data clearly shows that the answer is ‘now,” the authors of the paper wrote.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.