Sustainability is fundamentally reshaping how we do business. Profit and costs have traditionally been the two main KPIs for businesses. Now, we're witnessing the emergence of a third critical KPI: carbon. According to a Gartner Press Release, “Gartner predicts 70% of technology sourcing leaders will have environmental sustainability-aligned performance objectives by 2026.” Sustainability KPIs are becoming just as critical as financial KPIs.
With increasing investor, customer, employee, and regulatory pressure to become more sustainable, the need for accurate and actionable carbon emissions data is crucial. Yet, many companies are still using outdated, manual methods to track scope 3 emissions, which often make up the largest part of their carbon footprint. Moreover, companies are reluctant to adopt new solutions and technologies due to additional resource requirements and toolstack overload, leaving effective carbon management and decarbonization at a standstill.
We are now seeing embedded carbon intelligence emerging as a driving force in supply chain decarbonization. The 2023 Gartner Hype Cycle for Supply Chain Execution Technologies reports that “ambitious GHG emissions reduction goals are driving the need to integrate efforts directly in supply chain operations versus stand-alone initiatives.” It's exciting to see the conversation evolve from 'why' integrate real-time carbon metrics to 'how' to do it effectively.
Our inclusion in two recent Gartner Hype Cycle reports — 2023 Environmental Sustainability Hype Cycle and 2023 Supply Chain Execution Technologies Hype Cycle — validates our approach.
Supply chain activities are a major source of global emissions. Notably, these activities encompass the scope 3 emissions which account for around 80% of most companies' carbon footprints. These emissions are the most difficult to measure because they occur outside a business’ direct control, both upstream and downstream in the product lifecycle.
While there has been an emergence of new solutions to help businesses with scope 3 measurement, adoption has been slow. This is due to the shortcomings of existing solutions, as well as a disconnect between companies' decarbonization goals and the actual operational changes implemented.
Existing tools for tracking scope 3 emissions are often manual and inaccurate, offering only outdated and retroactive insights. There's a critical lack of real-time, actionable data, and even when it does exist, it's siloed and disconnected from the decision-making process. As a result, many companies treat sustainability as an afterthought. According to Kevin Lawrence and Federica Stufano, Gartner analysts covering GHG emissions, “operationalizing sustainability requires GHG emissions data to be available to inform decisions like routing planning. Use of GHG emissions calculation applications makes this feasible by providing emissions factors for calculating a broad range of transportation variables in near or real time.”
We are convinced there's a better way forward. Companies shouldn’t need to rely on siloed stand-alone tools for driving their decarbonization efforts. These metrics should be embedded directly into the software that businesses already use — from ERP, procurement, logistics, and supply chain management to BI, finance, and HR, to name a few. This approach sidesteps common obstacles like cost and learning curves associated with adopting new tools. Most importantly, it places actionable emission metrics at the forefront of decision-making.
Progressive software platforms like Celonis, Cisco, Kinaxis, Sievo, Salesforce, Workday, SAP, and Microsoft are currently driving this change. At their core, these platforms enable businesses to enhance decarbonization and boost profitability by weaving these metrics into daily strategic and operational decisions, surfacing key carbon insights when and where the emissions occur.
Disclaimer
Gartner, Hype Cycle for Supply Chain Execution Technologies, 2023, 13 July 2023.
Gartner, Hype Cycle for Environmental Sustainability, 2023, 3 August 2023.
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