4 minute read
Public activism and debate over the last few years have pushed climate change to the top of every board agenda, every conference agenda and every political agenda. We have seen consumers and employees vote with their feet, moving to brands who have made commitments to reach net zero, so the pressure is on for major industrial manufacturers: at present, around 100 companies worldwide create the products that get used by their customers and their customers’ customers, to generate more than 75% of the world’s carbon emissions.
Which is why I was surprised by some of the findings in the new report published by R² Factory. The report focuses on how three years of unprecedented disruption have impacted the way senior executives manage risk and resilience in their supply systems, but in carrying out the research*, we discovered that many leaders in major industrial businesses do not have visibility of their firm’s Scope 3 carbon emissions, don’t know whether the products they make are recycled and have limited confidence in the ESG impacts of their suppliers.
- 47% of senior technology and supply chain professionals surveyed expressed little to no confidence in the environmental, social or governance (ESG) impacts of their indirect suppliers (the suppliers to their suppliers)
- Only 33.8% of business leaders felt they had some visibility over their company's Scope 3 carbon emissions
- 36.6% of executives didn’t know whether their products were recycled or re-purposed at the end of their useful life
While only a third of senior executives felt they had visibility over the Scope 3 emissions in their supply networks, nearly four in five (77.9%) said that understanding their supply chain was relevant to meeting their business’s ESG or Net Zero commitments, which shows there is some way to go.
Of course, none of this has become easier for senior technology and supply chain professionals. In the three years since Covid-19 reared its ugly head, global supply chain disruption has increased to eight times the average levels since records began. Meanwhile, after several years of rapid growth in corporate AI adoption, investment has plateaued since the pandemic began. The report found that 90% of executives have become more aware of complexity in their supply chains over the last three years, with over a third of those surveyed rating their supply system now as ‘extremely complex’.
The full report ‘Network Thinking: the paradigm shift in understanding industrial supply chains’ is free to download from our website.
R² Factory is an AI and machine learning business, originally created within the data analytics arm of Rolls-Royce. So, it’s a new venture, but one with three decades of institutional memory in unlocking hard-to-access data; working with complex systems and legacy infrastructure; and building data-driven innovations for the most demanding industrial environments. We work with major industrial firms to help them understand the complexity in their dark data, optimise their supply chains and help report and reduce their Scope 3 emissions.
* Research was carried out between September and December 2022, by (1) holding in-depth interviews with CEOs, Chief Technology Officers, senior logistics and procurement leaders and academic experts, all with direct experience of, or specialism in, supply system design and operation; (2) conducting a series of expert roundtables to provide a forum for debate and discussion around changing supply chain dynamics, in the UK and United States; (3) launching the Industrial Supply Chains Survey in December 2022, in which over 90 senior global executives participated.