Businesses challenged to increase uptake of renewable energy in supply chains

Businesses are being urged to do more to accelerate the low-carbon transition by driving greater take-up of renewable energy in their supply chains.

A new report has highlighted the huge potential to reduce emissions if corporates leveraged their purchasing power to amplify their own sustainability efforts.

Research for the Renewable Energy in the Supply Chain report compiled by leading independent energy supplier SmartestEnergy and featuring contributions from the Carbon Trust and CDP, found that there is a significant appetite amongst large businesses to work with supply chains to reduce emissions.

Although progress is already being made by some leading firms, the report says much more could be achieved if companies encouraged their suppliers to switch to renewable electricity.

The report comes as the number of major global brands pledging to be powered by 100% renewables continues to gather momentum, a trend fuelled in part by the success of initiatives such as the We Mean Business Coalition, RE100 and the Science Based Targets initiative.

David Cockshott, SmartestEnergy’s Chief Commercial Officer, highlighted the scale of the opportunity for businesses to amplify their sustainability efforts through the supply chain.

“Procurement of renewable energy by corporates is already having a tangible impact on the increasing proportion of low-carbon generation in the energy mix. By encouraging their suppliers to also choose renewables they can rapidly multiply their own contribution to climate change.”

Cockshott said as a supplier to leading brands and second-tier suppliers, SmartestEnergy is seeing a significant gap between what the top sustainable brands are doing and the rest of the business world.

“Progress is clearly being made but is commitment to renewable electricity really at the level it should be? Given how easy it is to choose renewable electricity in the UK, businesses could be doing more to engage with their suppliers,” he said.

Dexter Galvin, Head of Supply Chain for CDP also emphasised the opportunities within supply chains.

“A small but growing number of leading private and public sector buyers are beginning to drive supply chain resilience by pushing key suppliers towards renewable energy. This feels like the beginning of something big.”

“The increased adoption of renewables within global supply chain networks is key to a successful transition to a low-carbon economy, and will be a huge driver in market growth for the sector,” said Galvin.

Guy Rickard, Senior Consultant at the Carbon Trust also highlighted the opportunities for major firms to demonstrate leadership.

“For most large companies, engaging with the supply chain is the single biggest opportunity they will have to take action on climate change. One of the best ways to have an impact is through supporting and incentivising suppliers to take action on their own emissions, for example through the purchase of renewable electricity,” he explained.

“Today we are starting to see some great examples of business leadership where companies are driving real results from supply chain engagement, but if we are going to meet international ambitions on climate then we will need to see efforts accelerating throughout the economy.”

The report identifies relatively simple steps that can be taken by companies without committing to full supply chain carbon reporting or engaging with every part of their supplier network

“Simply asking whether a business uses renewable electricity on tender documents for example could have an impact on adoption,” explained Cockshott.

“We can draw parallels between this approach and the recent update to the Modern Slavery Act which is driving real change in the UK. If there was a mechanism to challenge all businesses to play their part in achieving our carbon reduction targets, how might this turn sentiment into action?” he said.

A survey carried out for the report found almost all (96%) respondents believe businesses have a wider responsibility to increase uptake of renewable energy through their supply chains. A third (33%) of large firms are now keen to start making renewable energy procurement a requirement on tenders.

The report also explains more advanced ways for businesses to work with their supply chain to help take advantage of the benefits offered by renewable energy. These include recommending an energy company which offers a verified renewable product and establishing a buying group which would enable key suppliers to join a portfolio and benefit from greater buying power.

> Download the report here