Decarb Story | Supplier engagement Coca-Cola Europacific Partners
Value chains are hot topic, and rightfully so. When you know that carbon emissions from the supply chain are on average 11 times higher than what is emitted directly 'on-site', you understand our interest. That is why we regularly reach out to the BACA-community, digging for inspiring stories about how they engage their supply chain in their climate plans.
First things first: What does CCEP’s Supply Chain look like and what impact does it have on your overall emission budget?
Philip: As a business, we rely upon a sustainable supply of ingredients like sugar, coffee, tea and juices as well as the raw materials we use for our packaging like glass, aluminium, plastic, pulp and paper.
Our suppliers represent over 90% of our Scope 3 emissions. This is why we have asked our suppliers to set their own science-based carbon reduction targets and to shift to 100% renewable electricity. These are the first steps towards decarbonising our value chain.
How do you start engaging a large number of suppliers towards carbon reduction?
Philip: We work with our suppliers to procure high quality raw materials and services, with sustainability in mind. We take an integrated approach to sustainability – making improvements and launching initiatives that support responsible sourcing, climate resilience, water stewardship and biodiversity.
We are engaging with suppliers to identify common challenges and work together to decarbonise our value chain.
We start value chain decarbonisation by focussing on 200 ‘carbon strategic suppliers’, who account for about 80% of our Scope 3 GHG emissions.
We have asked our carbon strategic suppliers to set science-based targets by 2023 in Europe (by 2025 in API) and use 100% renewable electricity by 2025 in Europe (by 2030 in API).
What are the other main elements of your Supplier Engagement Program?
Philip: The carbon strategic suppliers are key to our climate targets. As mentioned, we ask them to set science-based targets and switch to 100% renewable electricity. To support them in this process, we provide knowledge and training.
We are, for example, working together with TCCC to engage suppliers in the Supplier Leadership on Climate Transition programme, a cross-industry collaboration, that aims to provide suppliers with resources, tools and knowledge to support their own climate journeys. Participants get direct mentoring, and instructions on how to build internal capacity and earn recognition for their accomplishments.
The carbon strategic suppliers are key to our climate targets. We ask them to set science-based targets and switch to 100% renewable electricity.
In addition, we decided to provide a financial incentive through a sustainability-linked supply chain finance programme, structured and operated by Rabobank. The programme, initiated in 2022 and one of the first of its kind in the global beverage industry, incentivises and rewards suppliers for improving their ESG performance. Suppliers are able to access incremental discounts against the initial funding rate, provided that they meet certain sustainability-driven KPIs. This enables them to support our own plans to reduce GHG emissions across our value chain by 30% by 2030 and reach Net Zero by 2040.
How do you follow up on progress made?
Philip: In order to reflect the supplier effort on our targets, we assign supplier-specific emission factors to most of our carbon strategic suppliers. Emission factors are used to translate business activities (for example material tonnes we put on the market) to CO2 tonnes. We collect and validate these emission factors directly from our suppliers, initially focusing on suppliers of our packaging and ingredients. This work will be critical in helping us to reflect the impact of our suppliers’ actions more accurately.
In addition we plan to utilise SBTi’s MRV Protocol in order to monitor supplier progress against their SBTi set targets.
Did you experiment any hurdles during its implementation? How did the suppliers react, for example?
Philip: Some of our suppliers have been reluctant to set Science Based Targets and switch to renewable electricity - our main pillars for value chain decarbonisation. Sometimes that was because of lack of knowledge or experience with similar programs. Also, cost is a factor occasionally mentioned. But it’s been three years now since we’ve asked our suppliers to do those two things, and meanwhile we have offered a lot of support and incentives to comply. So, most of the initial reluctance has evaporated. We continue to work with suppliers to help them with the targets we set for them.
What support could policy, governments or international organisations provide to support you supporting your suppliers?
Philip: We are improving the accuracy of our carbon calculations by assigning supplier-specific emission factors to our carbon strategic suppliers. However this is a mammoth task that needs to be tackled as an industry.
Ideally, there should be one agreed standard for tracking the emissions of products and materials across the value chain. When a standard like that is agreed and governed by an international organisation, it will make carbon calculations a lot more accurate, and this in turn would help reducing emissions.
What are your plans for the future?
Philip: We plan to continue our supply chain decarbonisation programme across three pillars:
- Monitor and evaluate supplier progress against their SBTi targets (this is in collaboration with SBTi and CDP)
- Continue to assign and update supplier-specific emission factors
- Continue to support suppliers with their decarbonisation programmes
What would be your number #1 recommendation to other companies – within and outside of your sector – who want to get started with engaging their suppliers?
Philip: I would recommend the following 3 steps:
- Understand your Scope 3 carbon emissions and what are the key elements it consists of
- Identify the suppliers contributing the most to your Scope 3
- Create a programme to set targets and build incentives for those suppliers to begin value chain decarbonisation
Thank you for the openness, Philip!