Management Practice Insights

Abstract

Extreme weather events and geopolitical conflicts are stressing modern supply chains and underscoring the importance of embedding sustainability into business strategy. To that end, many companies have adopted net-zero pledges, signalling their commitment to reducing carbon emissions (CE). To honour these pledges, businesses need dependable sustainability data, as comprehensive and accurate emissions data can impact financial, operational and supply-chain decisions. However, the lack of standardised carbon accounting frameworks diminishes the trustworthiness of their claims. Existing accounting methods fail to capture comprehensive emissions data, especially for indirect emissions. This not only limits the stakeholders’ ability to evaluate progress toward net-zero goals but also affects investor confidence, regulatory compliance and brand reputation. So how can supply chain, accounting, and sustainability managers better capture their organisation’s carbon footprint, and use this for more sustainable and less vulnerable supply chains? The solution emerges from recent research by Stefan Reichelstein, who recommends using a structured carbon reporting framework that integrates both balance sheets and flow statements¹