Cutting Carbon, Cutting Costs: The Economic Advantage of Sustainable Supply Chains

April 16, 2024

April 29, 2024


x min read

With the dialogue on climate change becoming increasingly alarming and urgent, the spotlight shines brighter on sustainable supply chains as ways to save money—and the planet. Consider this: the core operations of just eight supply chains (food, construction, fashion, fast-moving consumer goods, electronics, automotive, professional services, and freight) are responsible for over 50% of global greenhouse gas emissions.

With Earth Day 2024 approaching (Monday, April 22), now is the time to stop talking and start doing. This year’s Earth Day theme is "Planet vs. Plastics," and the goal is ambitious: a 60% reduction in plastic production by 2040. So think about how you source, produce, and distribute products and positively impact the planet.  

The Carbon Cost of Doing Business

Scope 3 emissions are the elephant in the room when discussing cutting carbon footprints. These emissions come from all the bits a company doesn’t directly control or own—everything from the energy suppliers use to make the raw materials for your favorite sneakers to the fuel that powers the trucks delivering them to stores. Dealing with it also opens up a dual economic and environmental challenge.

Tackling the Scope 3 Emission Puzzle

Scope 3 emissions create a sprawling web of impacts that often go unseen, but usually make up the largest portion of a company’s carbon footprint. Imagine, for example, the journey of materials for a manufacturing company: from the extraction and production of these materials to their transportation and the eventual use of the sold products by consumers. This maze of interactions is where most of the carbon footprint hides, making Scope 3 emissions a tough nut to crack for the more than 400 U..S companies aiming for net zero by 2050.

However, it’s not all doom and gloom. The push for transparency and reduction in these emissions has sparked innovation. Tools like real-time trackers and IoT devices that gather data on just about anything—temperature, air quality, how products are moving, and more—and can help companies make smarter, greener choices across the entire supply chain.  

Fueling Savings & Stability in Supply Chains

Beyond helping the planet, greening supply chains saves money, too. Take fuel efficiency, for example. It's a simple equation: use less fuel, spend less money. In the U.S., such standards have not only saved $5 trillion in fuel costs, they’ve also kept 14 billion metric tons of carbon from heating our atmosphere. And for those still skeptical, consider this: stringent fuel economy measures have already netted vehicle owners over $7,000 in fuel savings over two decades. Even small changes in driving habits can lead to a 10% improvement in gas mileage.  

Tive’s Green Program is another example of how innovative economic incentives can galvanize more sustainable supply chain operations. By encouraging customers to recycle and renew trackers, Tive isn't just reducing waste—they are proving that green practices can benefit both the planet and the pocketbook. In 2023 alone, the program renewed 35% of Tive's domestic trackers, with goals to double this rate by the end of 2024. Yet, the broader benefits of such sustainable supply chain practices are that they build a loyal customer base that values eco-conscious choices and slashes operational costs. Consider how the most sustainable companies are often the most profitable—and how those with high Environmental, Social, and Governance (ESG) ratings enjoy average operating margins 3.7x higher than those with lower ratings.

Transforming Supply Chains Through Innovation

Let’s take a look at some other innovations that cut carbon, cut costs, provide economic advantages to sustainable supply chains, and directly tap into consumer demands.

Drones & AI: The New Frontiers

Drones are providing a new element to sustainable logistics from Rwanda to the U.S.  to slash emissions and expenses. Zipline's drones are a common sight in Rwanda, flying across the sky to deliver medical supplies to remote areas. Over five years, they've completed 200,000 deliveries, with each flight producing roughly 30 times less CO2 per mile than an average electric car. Meanwhile, Wing's drones have made at least 350,000 commercial drone deliveries across three countries—proving that drones aren’t just faster but greener, slashing greenhouse gas emissions per parcel by 84% compared to diesel trucks.

Beyond drones, AI helps make supply chains more sustainable by crunching vast amounts of data—and revolutionizing how companies approach everything from demand forecasting to supplier selection. Such tech also helps production align closely with demand, slash waste by optimizing resource use, and monitor suppliers' sustainability so that you choose only the greenest and most efficient routes. Perhaps most impressively, AI can also sift through consumer feedback, guiding companies toward products and practices that meet the growing demand for sustainability.  

Engaging Consumers & Companies in Sustainability

That’s a good place to transition into how sustainability's rising demand reshapes consumer behavior. For instance, products marked as “sustainable” are outgrowing their conventional counterparts 2.7 times faster. What’s driving this green rush? 78% of shoppers prioritize sustainability, and notably, over a third are willing to pay more for sustainable products and services. It’s also a generational shift, with younger buyers soon to command the most purchasing power—while placing trust and sustainability at the heart of their buying decisions.

This consumer-driven wave is crashing into the B2B world, pushing companies to green their supply chains or risk getting left behind. Over 20% of businesses are scrambling to align their Scope 1 and 2 emissions with reduction targets. Forward-thinking companies—including Maersk, Royal Philips, IKEA, and Unilever—lead by example, demonstrating that reducing supply chain emissions is both feasible and beneficial. Along with Bain & Company’s advocacy, these trailblazers emphasize a critical message: slashing carbon footprints should sit alongside efficiency and cost reduction at the core of business operations.  

Best Practices for Sustainable Supply Chain Management

So, how can you take words and ideas and turn them into action? Consider the following best practices to guide you toward more sustainable and cost-effective supply chain operations:

  • Invest in transparency and technology: Utilize IoT trackers, RFID, GPS, blockchain, and other innovative technologies and tools for real-time visibility, tracking, and emissions monitoring.
  • Adopt science-based targets: Align sustainability goals with global standards and KPIs to make a meaningful impact.
  • Engage in ethical sourcing: Implement fair trade practices, and avoid suppliers involved in child or forced labor​.
  • Promote circular economy principles: Encourage recycling and using renewed materials within the supply chain​, like Tive’s Green Program.
  • Leverage renewable energy sources: Incorporate solar, wind, and biofuels to reduce dependency on fossil fuels.

Greening the Chain: A Win for the Wallet & the World

As Earth Day approaches, making supply chains more sustainable is no longer a choice—it’s a necessity. Acknowledging this, companies such as Tive stand at the forefront, not just by offering solutions that track and monitor the lifecycle of products in real time but also through initiatives like the Green Program. Tive has set a precedent by recycling and renewing trackers, demonstrating the tangible benefits of sustainable practices that others can follow.

So, take the opportunity to cut costs, improve operational efficiency, and build a brand that resonates with the growing number of consumers who value environmental responsibility. The urgency to act is clear, with consumer demand for eco-friendly products rising and regulatory pressures increasing. Companies have a compelling economic incentive to adopt sustainable practices, from improving fuel efficiency to engaging in circular economy principles. Tive's solutions offer a pathway to this transformation, providing the tools companies need to monitor, manage, and ultimately reduce the environmental impact of their shipping operations.

Now is the moment to step up, embrace innovation, and commit to sustainability. So, answer the call of Earth Day and beyond—book a demo with Tive today, and let’s create supply chains that are efficient, profitable, and kind to our planet.

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