Supply chain

There are two key reasons supply chains are important for associations and their members in achieving climate-wise, viable futures. Associations must:
  • implement plans to minimise supply chain disruptions; and
  • influence others to cut emissions

Supply chain disruption

Climate change weather events can be deadly, expensive and disruptive. Climate-related disruptions to supply chains are frustrating, costly and potentially devastating for continuity of activities, sales and viability.
We are now seeing catastrophic weather events like the drought in Taiwan in 2021 that curtailed global manufacture of silicon chips that led to delays and costs in production of cars and electronic appliances; deadly heat waves in India in 2022 causing deaths, company closures and ruined products; and storms in Australia that wreck crops, towns, infrastructure and industries, totally preventing ‘business as usual’.
Associations can help members by analysing where the risks are in their supply chains, then developing strategies to minimise these negative impacts. This may involve finding alternative suppliers, holding material in stock, having contingency plans with existing and potential suppliers – even changing suppliers, customers and locations.

Emissions in the supply chain

Governments, businesses, individuals and associations are looking at the emissions profile of their suppliers and customers through their supply chains. They do not want to be purchasing from high-emitting suppliers or adding to emissions, and they see a competitive advantage in going green. For example, Meat and Livestock Australia has set an ambitious industry target toward carbon neutrality by 2030 as part of its strategic plan for a profitable, sustainable and globally competitive future.

“Climate change is the most significant threat facing global supply chains today. It’s already causing shortages and disruptions in some industries, and these challenges will only grow more frequent and severe if organizations don’t take action.”

Increasingly government, philanthropy and business tenders and specifications, partnerships and grant programs are based on emissions profiles, climate risks, efficiency improvements and environmental credentials (see McKinsey and Co Procurement plan, below).

These are Scope 2 and 3 emissions – indirect emissions that occur across a supply chain – which typically account for 80 to 90 percent of emissions.
Scope 1 2 3 diagram
Graphic source: Greenhouse Gas Protocol
In your association’s ‘ecosystem’ your own policies and actions can help sway others to change their approach. Opportunities exist to influence and guide others through your actions.
“Two-thirds of the average company’s environment, social, and governance footprint lies with suppliers. Procurement leaders who take bold action can make a decisive difference in sustainability.”
There’s no doubt that many associations in Australia and overseas have yet to recognise the need for action on climate change and reducing emissions. You can encourage, demonstrate, persuade and oblige your members, suppliers and customers to change their approach. Strategies include a combination of audits, partnership projects, trials or procurement requirements and contracts.
Our ClimateWise Toolkit can help guide negotiations and help organisations adapt their programs.
Sustainable procurement plan McKinsey
From McKinsey & Company Buying into a more sustainable value chain, September 2021

More opportunities for association influence

Because associations represent collective bargaining power, you have an opportunity to influence others on behalf of your members, as well as your wider sector or field of activity.

  • Suppliers and providers – Choose suppliers and providers with good climate-wise credentials when selecting partners or negotiating deals for your association and members. You can also negotiate group discounted offers for products and services such as renewable energy, audits, products etc.
  • Customers and audiences – You can steer your customers and audiences in their behaviour and choices. For example, hiring event venues that are sustainability leaders (renewable energy, EV charging, no waste etc), or noting participants’ pledges for climate-wise actions at the end of a seminar.
  • Other associations – You can approach associations that represent part of your sector’s supply chain to collaborate on climate policy and action. For example, the Widget Manufacturing Association could negotiate a sustainability and emissions reduction policy and improvement upstream with the Widget Component Association and downstream with the Widget Retailers Association. This may include reusable packaging system, low emission transport, etc.

No matter where an association and its members sit in a sector or supply chain, you can have positive influence on climate-wise actions. Any actions to influence others to become more climate-wise has potential flow-on benefits to your members.

Read more on our Case for Action page and our Benefits of climate-wise action page.