Supply chains are a massive contributor to global emissions, and for brands with international operations, the impact can be staggering—supply chain emissions (Scope 3) account for 75% of companies' total emissions.1 The usual suspects? Manufacturing, long-haul transportation, and wasteful packaging. Tackling these issues head-on is key to making a real environmental impact.
But let’s be honest: transparency in supply chain sustainability is still a big hurdle. CDP reports that fewer than 30% of companies actively work with their suppliers on sustainability.2 McKinsey adds that less than half of companies have a clear view of their supply chain emissions, and fewer than 10% are using supplier data effectively in their decarbonization plans.3
Then there’s the cost of doing nothing. Climate-related disruptions aren’t just bad for the planet—they’re hitting profits too. A study by King’s College London predicts that by 2060, climate-driven supply chain disruptions could cause global economic losses between $3.75 trillion and $24.7 trillion.4 Those aren’t numbers that brands with complex global supply chains can ignore.
Of course, supply chains aren’t one-size-fits-all. Freight might be the biggest emissions culprit for some businesses, while manufacturing practices dominate for others. And while air transport is less common than ocean freight, its carbon footprint is much higher. The bottom line? Every business needs to take a hard look at its own supply chain to get a clear picture of where its carbon footprint really comes from.
What makes a supply chain sustainable varies widely between companies, products and processes. Overall, companies should examine each stage of their supply chain and consider efficiencies that could be implemented. Unfortunately, that can be challenging for businesses that outsource their packaging, and the suppliers they work with are not fully transparent with their measurement and reporting. If you are working with a transparent supplier, important questions to ask them include:
There are several ways a company can reduce its supply chain’s carbon footprint ranging from how you manage shipping and handling to what materials you use in packaging. Some factors to consider include:
When shipping your product from manufacturing centers in Asia to distribution centers in the U.S. and Europe, you should consider two factors: how much excess space is in your packaging and cube density. Cube density refers to the ratio of the weight of the cargo to the volume it occupies within a shipping container. It is a measure of how densely packed the cargo is, combining both weight and volume considerations.
Research by Forbes finds that shipping containers sailing across the oceans from Asia are 24% empty. This means that every year some 61 million TEUs of containers are shipped unnecessarily, costing tens of billions of dollars and emitting approximately 122 million tons of carbon dioxide into the atmosphere.5 To reduce the amount of air you are shipping be sure to check the cube utilization of your packaging. When considering cube utilization, ask yourself “Is the packaging actually the right fit for the product that we are shipping?”
While corrugated packaging is more sustainable than plastic, not all corrugated packaging is the same. While it may seem like an easy way to cut costs, using sub-par corrugated board can lead to packages being damaged in transit, and many more problems throughout your supply chain. This then requires repackaging, requiring more material and creating a larger carbon footprint than if you had just used appropriate materials from the beginning.
Selecting durable corrugated materials from reliable suppliers helps minimize waste, reduce damage rates, and optimize supply chain performance. These decisions are especially critical for brands manufacturing in Asia and distributing globally.
New packaging regulations are raising the bar, pushing businesses to adopt more sustainable practices while gathering and reporting detailed supply chain data. For many brands, this means stepping up their efforts significantly in the coming years.
Starting in 2024, the EU Corporate Sustainability Reporting Directive (CSRD) will require large companies, EU-listed businesses, and non-EU companies with a strong EU presence to report on their environmental, social, and governance (ESG) practices in line with European Sustainability Reporting Standards (ESRS). By 2026, the Corporate Sustainability Due Diligence Directive (CS3D) will go a step further, asking brands to evaluate their entire supply chain for human rights and environmental risks, take action to address them, and be transparent about their progress. Falling short—especially when it comes to packaging—could lead to hefty financial and legal consequences.
The global push to reduce greenhouse gas emissions is accelerating, and companies that embrace sustainable supply chain practices will be better positioned to thrive in a low-carbon economy. By optimizing space utilization, improving packaging materials, and regularly measuring your impact, your business can lead the way toward a more sustainable future.
To learn more about how to reduce your company’s carbon footprint and increase readiness around coming regulations, check our regulatory readiness guide.