- There is increasing pressure from stricter regulations: The Corporate Sustainability Reporting Directive (CSRD) in particular aims to ensure greater transparency with regard to sustainable business practices by companies, which also includes the impact on the supply chain.
- Also investors, business partners and end consumers are increasingly interested in supply chain transparency
Challenges in supply chain transparency on environmental, economic and social impacts
Companies are faced with the challenge of identifying, tracking and reducing their emissions and their impact on the environment, climate and society. This confronts them with the question: "How can I measure and reduce the upstream environmental and social impacts of my suppliers?"
Sustainability in the supply chain has various dimensions. Among other things, the issue of climate protection is increasingly in focus. A large proportion of emissions are generated in the upstream value chain (scope 3 emissions from purchased goods and services). In order to achieve state-of-the-art climate targets and meet stakeholder expectations, it is therefore essential that climate protection is also taken into account in procurement and integrated into the relevant business processes. Due to the complexity and lack of data availability from suppliers when calculating scope 3 emissions, companies are faced with the challenge of calculating these holistically and efficiently.
Uniform criteria and reporting standards are needed in order to take concrete actions and measure their impact. In this way, companies can track their emissions along the supply chain and identify the potential for improving them. The Greenhouse Gas Protocol has therefore designed a comprehensive, globally standardised framework for measuring and managing greenhouse gas (GHG) emissions from the private and public sectors. The GHG Protocol divides emissions into three scopes: scope 1, 2 and 3.
Direct emissions from business activities such as fuel combustion and the company's own vehicle fleet, which are comparatively easy to determine through knowledge of precise consumption figures.
Indirect emissions from e.g. purchased electricity are also relatively easy to determine in a standardised manner via invoices or meter readings.
Includes emissions resulting from activities arising from the company's value chain (e.g. from business travel, purchased goods and services). Activity data for the scope 3 category is much more difficult to collect and is not available by default in many companies.
Sustainability Tracker – Your path to sustainable supply chain management
The Sustainability Tracker makes it possible to assess the impact of purchasing behaviour on corporate sustainability. The integrated SaaS solution can identify the impacts of the upstream supply chain in more than 80 dimensions (e.g. greenhouse gases, water consumption) from the environmental and social areas. Companies can incorporate this understanding into their procurement process to actively contribute to a more sustainable supply chain.
The Sustainability Tracker combines the purchasing and supplier master data information you already have from your procurement and ERP systems with the sustainability indicators from PwC's ESCHER (Efficient Supply Chain Emissions Reporting) input-output model. This enables a macroeconomic analysis of environmental and social impacts generated along the upstream supply chain. ESCHER combines data from various databases and follows the methodology of the Global Trade Analysis Project (GTAP). On the basis of the ESCHER model, ecological, social and economic data are linked to the existing purchasing data. As a result, transparency is created on direct suppliers (tier 1) as well as indirect suppliers (tier 1-n). As one of the multiple dimensions, the tool shows a large part of the scope 3 emissions of the upstream value chain. In order for the macroeconomic analysis to be as accurate as possible, qualitative purchasing data from customers must be made available.
The tool allows dynamic filtering of the evaluated supplier data such as the supplier's region, the commodity group and the purchasing volume. The related environmental and social impacts can then be viewed in total and compared with each other.
The function enables an individual analysis per stored supplier at the level of regions, commodity groups and suppliers.
Mitigation Strategy Dashboard
In the dashboard, mitigation strategies such as industry solution, supplier engagement, implementation of SBT or even passive management can be selected to assign suppliers or commodity groups to mitigation projects. The strategies are customisable for clients.
In the Mitigation Strategy Dashboard, mitigation projects can be created to set targets such as the reduction of GHG emissions or water consumption. Within a project, suppliers or commodity groups are assigned to the project and can be tracked via project tracking.
The status and progress of the projects is documented in the project tracking. All mitigation projects are visualised in order to have an overview of the required resources, the project progress and the time schedule.
The advantages of the Sustainability Tracker
You get a quick and complete overview of the ecological and economic in your supply chain. Furthermore first social factors are available and are constantly being further developed.
Interface to various purchasing systems, extracting the relevant purchasing data from the purchasing system and linking it to the underlying data model from PwC Germany (ESCHER).
Lean approach that combines a comprehensive macroeconomic analysis of suppliers' impacts on the environment, climate and society for more than 80 dimensions and a long-term impact management process and management tool.
Strengthening transparency along the supply chain and contributing to uncovering potential for reducing the environmental and social impacts of the companys' suppliers.
The results can be included in your companys’ sustainability report as part of GHG scope 3 reporting
Companies meet the increased requirements of investors, business partners and end users, as well as regulations.
- One-off analysis incl. results report
- Licence fee per year with individual login access to the application
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What is PwC's ESCHER model?
The environmental, economic and social impacts of our clients' business activities are often very complex due to the global interconnection of supply structures. Through a global impact analysis of sectoral and international supply chains, we use the ESCHER approach to determine direct and indirect effects of corporate activity and identify key drivers of these effects along the supply chain. With the help of input-output models that map international input linkages, we determine, for example, the CO2 footprint triggered by corporate activity or land and water use. Such an analysis allows us to identify opportunities and risks along the supply chain and thus supports your sustainability management.
Why is a transparent supply chain useful and necessary?
Transparent supply chains make processes such as purchasing, logistics and sales more quantifiable for the company itself as well as for stakeholders. In addition to a trusting effect on the outside, they can also create potential for promoting internal mechanisms.
What impact do upstream supply chains have on my company's environmental and social performance?
Upstream supply chains are becoming more and more important for the product life cycle due to a growing share of value creation and therefore also have ecological and social impacts. If critical suppliers do not comply with environmental and social standards as part of the product life cycle, this has a direct impact on the product
Furthermore, critical suppliers can also have a negative impact on the company through the allocation of GHG emissions from the upstream supply chain to the GHG reporting of the own company.