Green tech no longer a 'good to have' but a must in supply chains

THE great supply chain disruption of 2021, coupled with rising fuel costs, has put the entire industry through a stress test - but sustainability has not taken the back seat. Instead, issues such as carbon emissions and ethical sourcing are more prominent than ever.

"There's a real sense of urgency around climate, and that is pushing our customers to expect more from their suppliers," said Marcel Smits, Asia-Pacific chairman and head of corporate strategy at global food corporation Cargill. "From consumers to the investment banking industry to shareholders, there's mounting pressure from a broad range of stakeholders for companies to embrace sustainable solutions across their business."

Such pressure has spread across the whole supply chain and become a concern for companies of all sizes - from upstream multinational players, right down to small and medium-sized enterprises (SMEs) completing the last-mile delivery.

The Business Timesspoke to Cargill, Internet of things (IoT) specialist Ascent Solutions and corporate innovation firm Rainmaking to find out more about their efforts to green the supply chain.

Getting SMEs on board

When it comes to supply chain sustainability, reducing carbon emissions is one of the hardest, but most crucial goals.

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As an IoT specialist, Ascent Solutions sees a role for itself to help logistics SMEs manage their carbon footprint. It has teamed up with two other local tech companies, Evercomm Singapore and Hashstacs, to form a new joint venture (JV) focused on sustainability.

Called CO2X, the JV aims to provide local SMEs with accessible carbon tracking solutions, allowing them to adopt a data-driven approach to secure green financial services. On Oct 15, CO2X signed a memorandum of understanding with companies and association leaders from the transport, logistics and finance sectors.

CO2X's partners include a range of logistics and construction players, such as Bok Seng, Chuan Lim Construction and CWT, said Ascent's chief executive Lim Chee Kean.

The transport and logistics sector is a sizable contributor of carbon emissions in Singapore. However, many SMEs in the sector are still unfamiliar with the concepts around reducing emissions. "The phrase 'carbon neutral' is going to hit a lot of SMEs, and many will give a blank stare because they don't understand it," said Lim.

While some may hire external consultants to do a carbon-footprint audit, they may not understand how to act on the data. The quality of the data captured may also not be comprehensive. To address these challenges, CO2X leverages IoT devices to facilitate carbon emissions calculations for SMEs.

The data will then be actionable. For instance, it could pinpoint if a particular truck driver in a fleet has higher carbon emissions than others due to driving habits such as harsh braking. "This can save the company anywhere between 10 to 15 per cent on fuel," Lim said.

CO2X is also exploring the issuance of carbon avoidance certificates that can be captured on the blockchain. The verifiability would then help SMEs with attracting financial services, such as sustainability loans. Overall, Lim hopes to prove a "very important" point - that going green is not just about achieving a lofty ideal, but about saving costs and creating new financing opportunities for SMEs.

You are what you eat

Another big aspect of supply chain sustainability is about food and ingredient sourcing. This is where multinational corporations such as Cargill are stepping up efforts.

"To drive long-term change, we have to start where our food system begins: on the farm," said Smits. "Too often, policies or commitments are set without regard to those who work and depend on the land. Without farmer engagement, the supply chain won't change."

When it comes to managing land and water resources, the company has several goals. It wants to transform agricultural supply chains to be deforestation-free by 2030, and to achieve sustainable water management in operations and all priority watersheds by the same deadline.

On the human-capital front, Cargill also aims to provide training on sustainable agricultural practices and improve access to markets for 10 million farmers by 2030.

Here in South-east Asia, Cargill is also implementing tech for supply chain traceability. In 2017, it began working with Koltiva, an agritech startup in Indonesia, to use CocoaTrace, a platform with apps to increase supply chain transparency and track progress against certification requirements. CocoaTrace collects smallholder farmer training data, measures adoption of farming best practices, and maps smallholder farm boundaries to ensure no encroachment on protected areas. It then ties this data to physical volumes sold to Cargill, ensuring a sustainable supply chain.

"Despite experiencing a global pandemic, natural disasters, and drought all in the last year, the food system is still standing and adapting. And we are working every day to ensure it is more sustainable, more resilient," said Smits.

An ongoing journey

Efforts by companies such as Ascent and Cargill cannot bring about change overnight. It will have to be a gradual journey, noted Angela Noronha, director for open innovation and decarbonisation at Rainmaking.

The corporate innovation firm in June teamed up with Enterprise Singapore to launch an accelerator for the transport and logistics sector. Called the Supply Chain Resilience Accelerator, it will back at least 20 startups from Singapore with supply chain solutions.

To be sure, there are still companies which "have traditional mindsets and see sustainability as a nice-to-have (and) a passing trend, rather than an inevitability and almost an existential crisis", Noronha said. However, change is coming. Companies are heeding more calls to emphasise sustainability, whether from end-consumers or business-to-business partners.

Lim of Ascent echoes this optimism. Even amid the operational pressures this year, a number of supply chain and logistics SMEs "very quickly jumped on board" initiatives to assess and manage their carbon footprints.

"The younger SME bosses are even saying that this is something that they can choose now, but in the near future, they may not have a choice; they may be asked (to reduce their carbon footprint). So it is better to do it now than later," he said.

Supply chain players that are direct contributors of carbon emissions are receiving the most attention now. But they are only the tip of the iceberg, noted Felipe Araujo of Rainmaking. "A big challenge is actually going down the iceberg - what is below the waterline is bigger than what is on top. These are the segments that are still at the earlier stages of the learning curve," he said. There will be "pain, denial and resistance" as all players are forced to become sustainable.

But Noronha adds: "The more a spotlight is shone on different parts of the supply chain, the faster (companies) will start to do these things, and the easier it becomes."

For more of our SWITCH 2021 coverage, go to bt.sg/switch21