Issue link: https://resources.tangoanalytics.com/i/1507482
Swapping Products & Suppliers: Retailers can drive impactful decarbonization by swapping high-emission products with more sustainable alternatives. For example, a clothing retailer can reduce emissions by replacing virgin cotton products with alternatives that use a higher percentage of recycled fabric. Consumer research suggests that consumers are willing to pay a premium for environmentally friendly products, sometimes as high as 60 percent. Engage Suppliers: Retailers can engage high-emitting suppliers in emissions reduction initiatives by identifying them first. Updating internal procurement guidelines to prioritize suppliers that comply with sustainability criteria or making it mandatory for suppliers to disclose their emissions are great starting points for supplier engagement. Obligatory reduction targets can be employed to continue contracts with suppliers. Other examples of emissions reduction initiatives might include working with a supplier to switch to an electric fleet, reduce the number of journeys needed, change the specification on packaging, or make something circular. Many major retailers are already having strategic conversations within their supply networks and transportation networks for operational reasons, which can be a great precursor to sustainability negotiations. Reevaluating Pricing Methodologies: The question of who will pay for transforming emissions of supply chains is an important one. Many factories that produce clothing in particular operate on thin margins in countries with lower incomes than those where retailers and their customers are located. If carbon reduction adds even modestly to their costs, it could wipe out their profit margin. Meeting one sustainability demand might add to the unit cost to the point where suppliers lower the quality of other products, which ultimately hurts sustainability progress in the long run if goods are not durable and their lifetime is shortened, leading to more waste and consumption. Retailers could sell fewer SKUs at higher price points or engage in cost-sharing with suppliers as a crucial solution. Updating Shipping Policies: For online orders, "rush shipment" for rapid last- mile delivery has a larger impact as it increases the likelihood of air transport or deliveries on partially empty trucks, contributing to overall inefficiencies. Shipping options that are more efficient include no-rush shipments, consolidating items into one box, or choosing to ship an online order from a local store's inventory. 03 — Decarbonizing Supply Chains