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Offsetting carbon emission in supply chains
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Offsetting carbon emissions from supply chains – how can this be achieved?

by Editor

Driven by climate change, a shift in consumer awareness and stricter legal directives, sustainable corporate management is becoming one of today’s major goals. More and more companies are actively working to improve their carbon footprint and minimize harmful emissions as much as possible. This affects the entire supply chain – from procurement to transport and distribution. As either the first or as an additional initiative, many turn to carbon offsetting. But which methods of such compensation actually prove to be environmentally effective? Anna Schuldt, sustainability expert and business analyst at Hermes International, has the answer.

offset co2 emissons

Anna Schuldt,
Business Analyst by Hermes International

Green supply chain management as a corporate goal

Logistics managers are increasingly declaring ecologically responsible action to be a strategic corporate goal. In view of the growing sustainability market and the increasing CO2 taxation, a reduced pollutant balance is also economically decisive. With the German Supply Chain Act coming into effect in 2023, the focus is shifting to the supply chain. This is illustrated by the 15th Hermes Barometer on Green Supply Chain Management according to which 22 percent of the 200 companies surveyed have already taken measures to improve their ecological footprint. 69 percent of active companies thereby rely on carbon offsetting – 14 percent more than in spring 2020. But which offsetting measures deliver the desired added value? What should those responsible look out for in order to achieve their own environmental goals? The answer is provided by Anna Schuldt, business analyst and sustainability expert at Hermes International, a division of Hermes Germany.

How can companies offset their carbon emissions in the supply chain?

First of all, it should be noted that carbon offset is ideally the last step in decarbonizing the supply chain. The three-phase model that Hermes International has developed for more sustainability in the supply chain first provides for the phases “transparency” and “control”. The main goal is to actually achieve a reduction or avoidance of emissions. Where we are currently unable to avoid or reduce, offsetting offers the opportunity to increase efforts while we continue to drive towards our main goal. Nevertheless, for smaller companies or those inexperienced with sustainability strategies, starting with offsetting is certainly a step in the right direction. It often pays to start with a competent partner and focus initially on a specific part of the supply chain – for example, the long route where most emissions are generated.

Analyzing carbon emissions in the supply chain – and reducing them sustainably

On the other hand, for larger and more experienced companies, we recommend that they first ensure transparency in their supply chain. Those responsible should ask themselves in which section of the supply chain what kind of emissions arise and where they can best begin to take action in their sustainability strategy. This requires targeted, digitally supported monitoring, detailed analyses and reporting with clear visualization. Next, it is time to start controlling emissions – reducing carbon through targeted supply chain management: The development of a suitable catalogue of measures is followed by the active redesign of processes to exploit potential for optimization. For large companies with their own sustainability strategy, it is usually worthwhile to take a holistic view of all the company’s carbon emitters and develop a reduction and compensation strategy aligned with the results using a PWC-certified calculation method.

Offsetting carbon, supporting sustainability projects

In addition to the control measures for the reduction and avoidance, the sustainability strategy is further advanced through offsetting measures. There are now several certified offsetting providers on the market with different focuses. Some concentrate on projects in the region and work with donation concepts, others cooperate with worldwide initiatives and issue certificates. For its customers Hermes International cooperates with the provider Arktik, which pursues various climate protection projects worldwide that are oriented towards the Sustainable Development Goals. With these projects and initiatives, companies not only support the saving of CO2, but also improve, for example, the lives of the local population or contribute to the preservation of biodiversity.

Carbon offset according to the Gold Standard

Offsetting CO2 this way is neither cost-intensive nor complicated: Approaches and measures of this kind can already be implemented for a fraction of the container costs and can achieve a great effect for the well-being of the population in whose habitat the projects are located. Our cooperation partner Arktik, for example, promotes climate technologies such as the expansion of wind farms in Taiwan, the reforestation project “Kikonda Forest Reserve” (KPR) in Central Uganda or the production of fuel-efficient cooking stoves in East Africa. When selecting a suitable provider, supply chain managers should ensure that the available services are certified according to the Gold Standard. Only projects that verifiably contribute to the reduction of greenhouse gases and also make a contribution to the local environment and the improvement of the quality of life of the population are eligible for certification by “The Gold Standard”.

Hermes International supports its customers in the development and implementation of a forward-looking sustainability strategy. We point out sensible offsetting options and projects, support companies in implementing them according to the guidelines of the Gold Standard and issue a certificate showing the results of the offsetting process for unrestricted further use. Thereby, companies take the first steps towards obtaining certificates for verified climate neutrality and send a strong signal to the outside world about their sense of responsibility and implementation strength.

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