How can operations and supply chain teams prepare for Fit for 55?
In July 2021, the European Commission proposed making the European continent climate-neutral by 2050. Its proposal targets making all sectors of the economy fit to meet this challenge, starting with a 55% reduction in emissions by the end of the decade.
The challenge for businesses is to reduce their emissions by 55% by 2030 or 'Fit for 55'. This article outlines our approach to ensure your organisation and supply chain partners develop a measured but comprehensive strategy to reduce liability risks for organisations managing their compliance response to the EU Green Deal and Net Zero legislation.
Supply chain strategy
Over the last three years of carbon stream mapping, we have observed the organisations that set themselves up for success and failure in their approach to carbon compliance. Working with diverse sectors like marine, oil and gas, transportation, food and drink, and agriculture has given us a profound understanding of businesses' approaches to comply with carbon regulations.
We have found that success in responding to the challenges of the EU Green Deal and Net Zero is how operations and supply chain teams develop their strategy. The organisations prioritise collecting accurate baseline data at the operational level and from supply chain partners who succeed. This is the starting point that ensures organisations can align with the legislative and compliance timeline. In many cases, failure is when companies focus on the reporting outputs and set targets before they bring their operations and supply chain teams into the conversation.
Business transformation
The Fit for 55 Package encompasses legislative initiatives across various sectors, including energy, transport, and buildings. It is intended to overhaul the EU's climate policy framework fundamentally and put the EU on track to deliver on its 2030 climate target of 55% reduction. The Fit for 55 proposals will see businesses transform, but how should boards and operations teams start? What are the priority areas of focus for managing the downward pressure on supply chain companies? How can you develop a comprehensive strategy which stays ahead of legislative and compliance requirements?
What do I need to do now?
At Martello, we have developed a structured approach based on an open conversation about what is required now and what will likely be required in the next five years. We work to understand your current position, from helping develop an ESG Strategy and framework to a detailed analysis of all indirect emissions associated with a business and its supply chain.
Focus on the complex numbers.
With a greater emphasis on reporting the 'E' of ESG, we suggest measuring and reporting your current Greenhouse Gas (CHG) emissions (Scope 1 & 2). Measuring and reporting these as complex numbers will help focus future ESG and decarbonisation efforts and provide a solid baseline of current activities.
Downward supply chain pressure
Additionally, reporting these numbers is imperative for many businesses, with the information filtering through to annual reports. For others, the requirement is filtering down to them from larger suppliers, who are already trying to assess their scope 3 emissions (indirect). This downward pressure on the supply chain makes measurement a requirement, and reporting these numbers is seen as imperative for many businesses with the information filtering through to annual reports. For others, the requirement is filtering down to them from larger suppliers, who are already trying to assess their scope 3 emissions (indirect), a requirement that is only likely to increase.
Baseline current activities
With an ESG strategy and framework and a baseline of current activities, we build on current social and governance efforts to create a fully integrated approach to ESG. This comprehensive approach not only meets the business's needs but also opens new opportunities for growth, cost reduction, and the development of a transition strategy in a sustainable way.
Understanding legislative timeline
We understand your concerns about evolving legislative requirements and timelines. However, Martello's approach assures you of flexibility and adaptability. By working in advance on proposed legislative changes and identifying how the various compliance requirements will require you to change your business model, we can ensure you stay ahead and navigate these transitions smoothly.
Take a comprehensive approach
A comprehensive approach is essential for success, and avoid focusing on reporting outcomes over measuring. It is the key to achieving your goals and overcoming obstacles to responding to net zero and EU Green Deal Carbon Compliance. By taking a well-rounded approach that considers all factors, you can make informed decisions and take meaningful action. Refrain from settling for a narrow perspective—embrace a comprehensive strategy and unlock your full potential.
How should businesses respond to the legislation?
1. Understand what legislation will affect your business now and in the future.
2. Develop a robust ESG strategy and framework.
3. Measure your business and supply chain carbon emissions. This will enable you to uncover and mitigate your carbon liabilities.
How can Martello help?
1. Understand which legislation will affect your company in the next five years.
2. Help you develop your ESG Strategy and Operating model.
3. Measure your supply chain's carbon liabilities.
4. Create an action plan to reduce your liability.
More about Martello and the Carbon Stream Map
Martello supports businesses and investors in reducing costs and liabilities in response to global carbon, climate, and net zero legislation.
The Martello Carbon Stream Map (CSM) unlocks the blueprint for boards and investors to decarbonise an organisation, supply chain, or portfolio by quickly calculating end-to-end operational and supply chain costs and liabilities.
The CSM is a highly visual tool that identifies the systematic options to affect emissions within one operation or down through its global supply chain.
If you believe we can help with your compliance needs for the Corporate Sustainability Reporting Directive (CSRD), the EU Green Deal, Net Zero compliance, or other areas of ESG, please schedule a time for a consultation.
We can measure and map any business in any sector or geographical region. The data allows business leaders to execute their plans at any point in their net zero transformation journey, supporting any level of operational maturity.
Our other services include business improvement, strategy, financial and capital markets advisory, and regulatory and communications.
Connect on our channels
