Climate Crisis: Step Forward Procurement

Friday, January 17, 2020

Bill Young, a CASME RoundTable facilitator in EMEA, asks what actions businesses are taking towards meeting the net-zero carbon emissions goal, and why Procurement should start preparing a board paper to show what lies ahead.

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To this point, the climate crisis has caused little disruption to business and economics.  Despite the legally required deadline for net-zero carbon dioxide emissions by 2050 being insufficient to keep warming below 1.5 degrees C, and not even being on track to meet it, practically nothing is happening. Until now, that is.

Ursula von der Leyen, President of the EU, had already promised a sweeping carbon border tax to accelerate reduction in carbon dioxide emissions.  At the end of December 20219 there were two statements that point to the mobilisation of politics and business.  

  • The Governor of the Bank of England announces that valuations of oil and gas assets may have to be written down to zero because they are based on reserves which, if exploited, would drive global warming to four degrees.
  • The Gas and New Energy Director of Shell, Maarten Wetselaar, calls for government intervention to limit fossil fuel use.

Pause for a minute to let these statements sink in. Consider the impact of a collapse in the share price of oil and gas firms, and combine that with the effect of swingeing carbon taxes. This would be a massive jolt in ways many hope for, but few yet imagine.

What is your organisation doing about it? More specifically, what is Procurement doing?

No function within an organisation is better able to model the economic impact of severe carbon pricing and how to get ready for it, than Procurement. All of our experience in input-price modelling, total-cost-of-ownership (TCO), and impact assessment has prepared us for this moment.

It is time to step up and show executive directors not only what effect carbon taxes will have, but how pricing models can anticipate these, to change operations and behaviour in advance.

Prepare a board paper now; show your leaders the full extent of what lies ahead. Don’t let them believe that the problem can be exported: your organisation will have to account for its full environmental footprint. Governments are fully aware how companies that claim to be compliant cheat by buying products that have left their dirty footprint elsewhere; or by ignoring the steel, concrete, glass and plastic in their shiny, new, ‘green’ headquarters. 

Or you could do nothing until asked...

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This blog was written by Bill Young, a CASME facilitator and independent procurement specialist. 

 

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