Net-Zero Pledges Reconstructing Carbon Monitoring in CPG Supply Chains
The net-zero carbon race is transforming the business environment, especially for consumer packaged goods (CPG) firms. Most multinational companies have pledged to become net-zero by 2050, with this prompting a tsunami of accountability along their supply chains. Suppliers are increasingly being asked to monitor and cut their emissions or face being left behind as these companies deliver on their climate commitments.
The Expanding Requirement for Carbon Accounting
With the growing consumer demand for sustainability, the CPG brands now face mounting pressure to deal with their carbon footprint. Much of emissions, especially Scope 3 emissions, occurs as a result of indirect activities along the supply chain such as raw materials, manufacturing, and transportation. The emissions account for most CPG companies' overall carbon footprint but are difficult to monitor and control. Against rising regulation and public attention, carbon monitoring has moved from an ancillary activity to a core business imperative.
Major retailers such as Walmart and Tesco are at the forefront, requiring their suppliers to report and monitor their emissions, with the threat of fines for non-compliance. Moreover, international regulation such as the EU's Corporate Sustainability Reporting Directive (CSRD) and U.S. state-level climate disclosure statutes are compelling businesses to take action.
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Overcoming Scope 3 Emissions with AI
Scope 3 emissions comprise approximately 75% of CPG companies' overall emissions, and this represents a particular challenge on the path to net-zero. Conventional processes like spreadsheets and manual tools are weak and error-prone. But artificial intelligence (AI) platforms are disrupting carbon accounting by digitizing data gathering and processing. AI is synced with procurement platforms, utility meters, and logistics trackers to offer end-to-end data and visibility on the supply chain. Through this technology, brands can detect areas of high emissions, spot inefficiencies, and lower emissions proactively, so they can comply with regulatory requirements as well as consumer expectations for responsible practices.
