Supply chains and climate targets

Targets that are reflected in recently adopted regulations or regulations that are currently being coordinated are directly related to supply chains: 

Supply Chain Due Diligence Law of the EU: 

A supply chain law is being drafted at EU level which will oblige companies to check their suppliers along the entire supply chain. This includes direct and indirect business relationships. The aim is to ensure compliance with applicable human rights standards and environmental protection, to promote a fairer and more sustainable global economy and responsible corporate governance. Following adoption of the draft by the European Parliament and Council, member states have two years to transpose the directive into national law. 

Supply Chain Act in Germany:

Germany has taken the lead at national level regarding this law. The Supply Chain Due Diligence Act has been in force since January 2023 and regulates corporate obligation to respect human rights along the supply chain, e.g. for input as well as finished products from abroad. 

EU Taxonomy: 

The EU's six climate targets have been implemented in the EU taxonomy regulation from the beginning of January 2022: 

• Climate protection 
• Adaptation to climate change 
• Sustainable use, and application of, water and marine resources 
• Transition to a circular economy 
• Prevention, or control of environmental protection  
• Protection and restoration of biodiversity and ecosystems 

This involves checking whether companies influence one of the six environmental goals in a positive way without counteracting any of the other five. 

Corporate Sustainability Reporting Directive (CSRD): 

The EU framework regulates disclosure requirements in relation to ESG factors (Environmental, Social, Governance). CSRD takes into account the EU's six climate targets. In the first step, these apply to large companies with 250 employees or more and a turnover of over 40 million euros. From 2026, listed small and medium-sized enterprises will also be included. 

To comply with legal requirements on the one hand and customer-oriented requirements on the other, companies need to understand where their emissions originate. 

According to the Greenhouse Gas Protocol of the World Resources Institute and the World Business Council for Sustainable Development, emissions can be divided into three source areas:  

• Scope 1: Facility Emissions - direct emissions from sources under the control of the company 
• Scope 2: Energy Emissions - indirect emissions from purchased energy (electricity, heating, cooling, etc.) 
• Scope 3: Supply Chain Emissions - all other emissions, from upstream and downstream business areas: from procurement, transport of supplies, business travel, use of products sold, and product disposal. 

In customer-facing sectors (see chart below), a company's direct emissions footprint is relatively small, with up to 90 % coming from the supply chain. This is because as soon as one company in the supply chain causes emissions, these are incorporated into the final product. Therefore, companies need to exert appropriate influence on upstream and downstream sectors from within their organisation to drive transformation. 

Companies in customer-facing sectors can positively influence the climate impact by decarbonising their supply chains (Scope 3). The greatest challenge in this area is obtaining data to set clear targets and standards that suppliers will be required to meet. 

inloop supports companies on their journey to climate transformation with the following measures: 

• Supply Chain Health Assessment 
• Screening of supplier data and development of an action plan taking into account customer needs 
• Anchoring the reduction targets in the corporate strategy 
• Adoption of a procurement strategy 
• Entering into partnerships with suppliers, e.g. joint use of software 
• Orientation to peer groups 
• Creation of the digital infrastructure 
• Adaptation of systems and processes as well as monitoring of KPIs 
• Empowerment of employees and corporate communication 

With our analysis, we show the potential of your company and define corresponding transformation goals. We provide support in joint implementation with suppliers and make our extensive network available to you.