Pillar 2Supply chain Scope Supply chain emissions come from upstream and downstream activities, such as raw material extraction, manufacturing, packaging and transportation (freight). They are the main component of Scope 3 emissions according to the GHG Protocol.48 In the humanitarian sector, these come from the procurement of goods & services for the organisation itself, and the distribution of food, non-food or medical items to beneficiaries. Why does it matter? According to data consolidated by Climate Action Accelerator working with its humanitarian partners,49 procurement represents between 40% and 60% of GHG emissions produced by individual organisations, reaching up to 75% in some instances. Climate Action Accelerator’s initial assessment shows that the purchase of goods and services represents 74% of sector-wide emissions, the majority of these coming from food supplies, non-food items (NFIs), and medical and nutritional products. The supply chain is the most complex and challenging area in terms of footprint reduction, but is where the potential for reduction is the most significant. What does this mean for the humanitarian sector? At its core, humanitarian procurement means: ‘Buying and delivering requested supplies and services at the places and times they are needed, while ensuring best value for money, in the immediate aftermath of any emergency and reconstruction situation, including items that are vital for survival, such as food, water, or shelter.50 It is therefore a strategic, technical and logistical question that is deeply connected to the capacity of individual organisations, and the humanitarian system, to fulfil their social mission. Reducing emissions from procurement is cross-cutting by nature. It implies major changes in the way the sector operates. The involvement of programme teams and management is of paramount importance to make these transformation efforts successful. Due to their weight within the sector and their capacity to influence suppliers, large operational UN agencies should be at the forefront of supplier engagement and the transformation of humanitarian supply chains. Top solutions for reducing procurement-related emissions Tackling these challenges one after the other provides the humanitarian sector with a powerful set of opportunities for reducing emissions from procurement. Key solutions identified by the Climate Action Accelerator to reduce emissions from supply chain are: Switch to low-carbon, sustainable alternatives. Privilege low-carbon suppliers and contribute to shaping markets. Buy only what is needed. Shift from air freight to sea, road or rail freight. According to Climate Action Accelerator’s initial sectoral estimates, solutions addressing emissions associated with procurement can contribute to 23% of total emissions reduction efforts. Co-benefits Savings generated by the limitation of purchases through efficiency gains can be reinjected into procuring products with a lower carbon and environmental footprint or into programmes. Providing quality assistance through long-lasting products at the community level reduces costs in the long-run and improves how humanitarian organisations are perceived. Reducing single-use plastics avoids large volumes of waste and reduces local degradation of the environment. Working more with local suppliers that provide quality products and work on reducing their environmental footprint helps to build local capacity and creates employment opportunities, thereby contributing to the humanitarian-development nexus. Using low-carbon sustainable options helps to increase community resilience. For example, they can allow local populations to have access to longer lasting NFIs or shelter materials, support improving local agricultural practices or provide clean energy cooking solutions that also reduce air pollution. Procuring more sustainable products strengthens employee morale and motivation both locally and globally. Specific opportunities and challenges for humanitarian actors Rapidly evolving markets, positive experiences from the private sector, and increased availability of alternatives create opportunities for humanitarian organisations to succeed in reducing emissions from their supply chains: Opportunities The private sector is making progress towards targets in Europe, the US, China and India. According to the Science Based Targets Initiative (SBTi),51 which develops standards, tools and guidance for companies, the number of private companies adopting science- based targets is continuing to grow. Over 5000 companies had adopted them as of April 2024,52 and the number of SMEs adopting science-based targets grew by 58% in 2022.53 The maturity of suppliers on environmental and climate issues is growing fast. It is estimated that 28% of suppliers already have a low-carbon transition plan.54 As humanitarian supply chains tend to be highly concentrated, in many cases targeting a limited number of items (10 to 20) is enough to achieve a significant impact. For instance, food makes up 24%55 of ICRC’s total carbon footprint, and 38% of the footprint related to purchased goods and materials. The top 10 food items purchased account for 74%, the vast majority coming from rice. Given this level of concentration, organisations may want to focus their efforts on a set of top items. Humanitarian organisations have only just begun to transform their procurement practices. Hence, there is significant potential to improve. Best practices include identifying the key impact areas of top items, identifying quick-win actions, mapping and evaluating suppliers, developing a sustainable procurement policy and integrating this into procurement processes, engaging with existing and new suppliers to identify alternatives. Challenges While the buying power of individual organisations might be limited, a few large organisations such as UNICEF, WFP, UNHCR, ICRC, IFRC, etc. have sufficient individual and/or collective weight to influence suppliers. Moreover, the humanitarian sector’s moral/ethical leadership is attractive to the private sector and thus gives it leverage. The humanitarian sector frequently works with local small and medium enterprises (SMEs) who tend to have more limited technical and investment capacities. This requires deeper engagement to establish long-term relationships and reconcile environmental considerations with the specificities of local distribution and production systems. Both internal supply policies, and donor expectations continue to be based on price, quality and lead time, as opposed to other climate and environmental criteria. A shift away from this approach is needed, based on the understanding that the best value for money includes positive environmental and climate outcomes. The availability of goods and services at a given time and in each place is of paramount importance for humanitarian organisations who respond to sudden-onset disasters and other emergencies. Alternative solutions and processes need to account for a certain lack of predictability. In areas of intervention, end-of-life management of packaging and distributed items can be challenging due to limited local recycling systems. SOLUTIONS #1, 2, 3 Doing the math: cost/ benefit analysis of supply chain-related solutions56 Addressing emissions associated with the procurement of goods and services Procurement: average yearly evolution of financial impact (as % of yearly budget) This solution costs on average 0.67% of the budget over seven years, with the financial impact varying from net savings of 0.30% to net costs of 1.52%. The average net financial impact increases from 0.04% on average in year 1 to 1.73% in year 7. There are no investments related to this solution. Main assumptions: The increased cost of greener procurement is usually estimated at 10% of goods and services. This is an average as greener goods and services can be cheaper or more expensive or can cost the same price. A Pareto approach to estimating goods and services allows us to focus on the most emissive purchases. Main differences between Climate Action Accelerator’s partners: Estimated over-consumption is the key driver for organisations generating savings from this solution. This mainly applies to medical organisations who have identified significant potential for reducing medical purchases. The pace at which organisations decide to increase their purchases also have a significant impact on the net cost of this group of solutions. Human resource costs are more significant for organisations with a global footprint and a wide range of purchases (typically involved in food and non-food item distributions), as they will have to source greener products from multiple suppliers in multiple regions. Solution #4 Shift from air freight to sea freight, road or train Figure 10: Freight: average yearly evolution of financial impact (as % of yearly budget) Freight solutions generate on average net savings of 0.14% of the budget over seven years, with the financial impact varying from average savings of 0.85% to average costs of 0.07%. The average net financial impact increases from savings of 0.04% on average in year 1 to 0.19% in year 7. Average savings grow from 0.06% to 0.27% between year 1 and year 7. Running costs are limited, growing on average from 0.02% to 0.09% of the yearly budget over the roadmap duration. Main assumptions: A ratio is used to calculate the number of tkm of sea freight and road freight required to replace 1 tkm of air freight: 1.64 for sea freight and 0.10 for road freight. The increased cost of greener transporters is estimated between 10% and 20%. Main differences between CAA’s partners: Savings depend very much on the organisation’s activities and the yearly cost of freight, which can represent between 0% and 0.18% of their yearly budget. An important factor is also the current mix of air freight and sea freight: the outlier has almost 100% air freight at the beginning of the roadmap, while some others are already very large users of sea freight. The ability to generate savings by transferring from air freight to sea freight therefore varies a great deal. The overall impact of freight solutions varies depending on the scale of use of greener freight providers, as these more expensive providers can offset some of the savings. Pillar 1 Pillar 3