Traffex: Highways England Procurement will Drive Zero-Carbon
In a live online seminar at Traffex, the annual show for road traffic and transport management professionals, Dr Adam Simmons, Director, Future Road Investment Strategies and Government Relations at government-owned Highways England, told a captivated audience that the company was working to coordinate the release of its net-zero carbon plan with the UK government.
When it comes to reducing carbon from both maintenance and construction work on the strategic road network, Malcolm Dare, Highways England’s Executive Director, Commercial and Procurement, said: ‘We’re only going to achieve this in conjunction with our supply base. So we have to work very closely with, and support and change, as rapidly as we are asking others to change.
‘Where Highways England can really catalyse change [is] we do spend a lot of money; we’re spending in the region of £4.5bn to £5bn a year and in some areas, we really can help support and take the change forward in that particular supply arena.
‘There’s going to be some areas where we’re going to look at our supply partners and say, well fundamentally you need to invest your money in developing products to meet the needs.
'And in return, what we would have to do is provide an accuracy of demand that maybe we haven’t done in the past, so that companies have a certainty of investing to develop those products, knowing that we will be taking those products as soon as they become available.’
Dare went on to add that, in the case of concrete and cement, which Highways England definitely buys an increasingly large volume of, ‘If other major infrastructure schemes like HS2 are already using, have selected and standardised low carbon concrete, we would look to adopt similar approaches.
'We do not want to go out and have a Highways England unique product which is effectively identical to a product made on HS2. We really want to help stimulate and catalyse a British low carbon concrete capability.’
Discussing fuel for plant, Dare suggested that Highways England should ─ and will ─ be having discussions with manufacturers across their global supply chain, ‘Because at the moment it is harder to see what the alternate power technology is to diesel fuel. But if we can understand by working with the sector and working with plant manufacturers in a triangle when credible alternate power sources come through, again what we can then do is stimulate that demand by saying by a certain date in time we would expect to see non-fossil-fuelled plant being used on the network.’
In response to a question from a visitor as to whether in future the supply chain’s approach to carbon reduction will be a large part of tender assessments, Mr Dare said: ‘It definitely will.’ He compared this to the Government’s approach to building social value into tenders.
He added that he would like to see hard evidence of what bidders were actually doing, rather than ‘glossy brochures'.
A Watershed Moment for Sustainability Commitments
Last month saw a landmark ruling where Royal Dutch Shell was instructed to significantly step up its 2030 climate commitments and slash absolute emissions by 45% compared to 2019 levels. This ruling represents a considerable advance on Shell’s stated aim to cut 45% of its emissions intensity compared to 2016 levels by 2035 – a target which provided leeway for increasing emissions as long as the relative carbon emitted per unit of energy produced fell. Now, this imposes a much larger climate obligation on Shell in calling for an urgent absolute reduction.
A ruling that sent ripples through the oil, gas, and energy sector
A watershed moment, this ruling is sure to cause significant alarm amongst fellow oil and gas giants who recognise – for perhaps the first time – that national courts can compel organisations to accelerate their reduction of harmful emissions under the Paris Agreement. Not only does it have "far-reaching" consequences for Shell itself and may even curb the potential growth of the company, but the decision is also likely to set a legal precedent for other energy companies and corporations. According to Thom Wetzer from Oxford University, who heads up the sustainable law programme: “all companies in the energy industry and all heavy emitters will be put on notice and have to accelerate their decarbonisation plans.”
This court mandate applies to not only the Shell group’s own operations but notably also to all the suppliers and customers of the group – strongly implying that Shell is being asked to tackle its Scope 3 emissions. Consequently, it is clear that Shell cannot meet the ruling’s demands alone; to make an impact across all carbon emissions scopes, Shell and other large businesses must immediately look towards forging new, productive partnerships with supplier stakeholders. Failing to do this not only means missed targets and mounting legislative action but also the reputational damage that this will cause to its brand and the company.
Activist investor warns of existential business risk
Reports on the Shell ruling were almost immediately followed by news of a coup attempt in American oil and gas corporation Exxon Mobil. Due to concerns surrounding Exxon’s strategic direction, hedge fund Engine No. 1 ousted sitting board members, stating that the climate crisis poses an "existential threat to the business", which the board has been reluctant to confront.
This small hedge fund accused Exxon of "a failure to take even initial steps towards evolution" and of "obfuscating rather than addressing long-term business risk", partly due to a historical lack of energy industry experience in Exxon’s board. This signalled an imminent shift in the company’s sustainability strategy, which was well received by the market, with Exxon’s shares rising 1.2% the day after the event.
The drive to reduce Scope 3 emissions
And if that wasn’t enough of a shakeup, this was followed by American multinational energy corporation Chevron’s shareholders voting 61% in favour of a proposal to cut Scope 3 emissions at their AGM, signalling frustration with the company’s slack approach towards climate change. Chevron has thus far failed to match its competitors’ net-zero targets with any commitments of its own.
For those less familiar, corporate emissions fall into three categories: Scope 1, 2, and 3. Scope 1 covers emissions from sources that an organisation directly owns or controls. Scope 2 refers to emissions from purchased electricity, steam, heating, and cooling that the reporting company consumes over the course of its operations. And Scope 3 is everything else – all other indirect emissions that occur within an organisation’s value chain, both up and downstream.
Why is this significant? Until now, Scope 3’s heady combination of difficult-to-manage and thus far easy-to-ignore has led large companies to abdicate responsibility for their value chain and sweep its emissions under the carpet. However, the Shell ruling indicates that this approach is no longer viable for big business. With courts stepping in and dictating climate policy to corporations as well as governments, the pressure is mounting on all heavy emitters to tackle their true impact and reduce Scope 3 emissions.
As organisations like Shell, Chevron and Exxon are considered responsible for the actions of their entire ecosystems, sustainability performance becomes contingent on supplier behaviour. The clearest example of this lies in Scope 3 emissions which, for many organisations, considerably exceeds the CO2 they emit directly.
Therefore, the time for green-washing and lip service is now over as pressure mounts from all stakeholder groups for large corporates to take decisive action on sustainability in the supply chain. However, businesses cannot turn promises into concrete progress without actively collaborating with stakeholders across the value chain.
For every five weeks that pass, we lose 1% of the decade
2030, the deadline for achievement of UN SDG-related climate commitments, is fast looming, and with every five weeks that pass, we lose 1% of the decade. The imperative to take immediate action has never been clearer. It’s now down to procurement, wider business leaders, and their associated supplier ecosystems to put sustainability strategy into action by:
● Defining, aligning, and communicating their corporate sustainability goals to focus suppliers, partners and the wider stakeholder groups on how they can make an impact.
● Collaborating systematically through technology using transparent processes that develop trust with suppliers and partners.
● Harnessing the innovation and IP within the supplier ecosystem, turning ideas into projects that can be managed and reported on transparently, and adding clear value trackers to prove impact.
Working closely with stakeholders in the supply chain is an infamously complex process, but it can be made that much simpler using Supplier Collaboration & Innovation (SC&I) technology. This ensures strategic alignment between buyer and supplier and provides comprehensive relationship governance and real-time performance visibility. This allows companies and their suppliers to work on sustainability initiatives more cohesively and develop innovative ideas through collaboration.
Here at Vizibl – through our SC&I platform combined with our knowledge and expertise – we are helping large enterprise organisations in the energy sector better leverage their supplier relationships and move closer to meeting those lofty 2030 sustainability goals.