A web in which the more than 300 million companies in the world are connected in one way or another – that is the image Exponential Roadmap Initiative’s Director Louise Rehbinder evoked. Both to illustrate how value chains connect companies, but also to depict how one company’s efforts to reduce greenhouse gas emissions hinge on that of suppliers doing the same.
This image set the scene for a session dedicated to reinventing value chains at the We Don’t Have Time Climate Hub, during Climate Week NYC.
Larger companies must empower their value chain
Larger companies can drive substantial impact by working along the value chain. This entails both putting requirements on suppliers and supporting them in the transition – particularly the vast number of suppliers that are small- and medium sized enterprises (SMEs) that themselves have limited resources and capacity for driving change.
Inter IKEA, represented by Head of Climate and Air Pollution, Sriram Rajagopal, launched an electricity procurement program across 13 key countries, representing 90% of their electricity consumption. By bundling the energy volumes of their suppliers, IKEA enabled access to lower electricity prices through larger-scale RFQs. This approach particularly benefits SMEs, which often lack the financial resources to secure competitive rates or access advanced procurement tools independently. This has not only improved general access to clean energy in these areas but also cut the share of fossil fuels in IKEA’s energy consumption from 15% to 7%, advancing their goal to fully phase out coal in production.
The need for sectorwide collaboration
To drive meaningful change, collaboration must extend beyond core businesses and their suppliers to include competitors and customer businesses. Jennie Cato, SVP Global Head of Public Affairs & Partnerships at Scania, highlighted their joint venture with Volvo and Daimler to develop high-capacity public charging infrastructure for electric heavy vehicles across Europe.
However, private sector initiatives like this depend heavily on political incentives and supportive policies. Rajagopal, Cato, and Elena Avesani, Vice President at Oracle Sustainability Strategy & Technology Innovation, all emphasised the gap between long-term sustainability goals and the short-term focus of political agendas. Rajagopal said:
The private sector needs to clearly demonstrate their intent and send demand signals through commitments aligned to the 1.5°C target. We have a window now, with the Summit of the Future and COP coming up. By February 2025, countries will submit their plans, providing every opportunity to engage and influence governments to do the right thing.
Avesani, emphasised that significant industry transformation can be achieved when even a portion of the sector addresses shared challenges that benefit the entire industry. [can you give an example of Oracle’s efforts?]
I think the best example I can give you is what the IT industry has done with the Responsible Business Alliance, founded back in 2009. Back then, it aimed at creating a supplier code of conduct for the industry’s supply chains. That organisation has grown exponentially and has shaped how we view our supply chains, not only from a human rights perspective but also in terms of decarbonisation and responsible sourcing of minerals.
I think it’s a broader concept we need to explore—how almost every sector has a pre-competitive effort that needs to be implemented. The purchasing power of an entire industry can truly drive change, and there’s the theory that 20% of a sector can drive change across the entire vertical.
Watch the session (41 minutes):
