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COP27 Agreement

COP27 - What does it mean for the sustainability of supply chain industry?

The past two weeks have been dominated by the COP27 summit in Sharm El-Sheikh, Egypt, marking symbolically the 30th anniversary of the adoption of the United Nations Framework Convention on Climate Change.

In the last thirty years, the world has come a long way in tackling the negative effects of climate change on our planet. However, as outlined during the COP27 discussions, the critical targets are still far from being met, necessary investments are not allocated as planned, and the CO2 emissions continue to rise. Summing up, there is still much to be done to effectively meet the Paris agreement’s 1.5-degree goal by 20301.

Follow along as we look into key takeaways from the discussions and what they mean for the sustainability of the supply chain industry.

Decarbonization & green energy

In accordance with the Paris treaty of 2015, the member countries of COP27 responded to the old recommendations with a package of 25 Priority Actions to decarbonize the power, road transportation, steel, hydrogen, and agriculture sectors. In practice this means that leaders across the supply value chain will need to commercialize sustainable materials, create transparency on greenhouse gas emissions as well as define realistic decarbonization aspirations along with practical implementation plans to achieve these goals. This also includes a wide cross-value chain collaboration and future-proof sourcing strategies for low-carbon offerings2.

The First Movers Coalition, which was launched at COP26 to help drive industrial decarbonization, has grown to 65 corporate members from the FMCG, automotive, and manufacturing industries, with a combined market cap of approximately $8 trillion. Together they have pledged a total of $12 billion to commercialize zero-carbon technology to decarbonize the heavy industry and long-distance transportation sectors, which account for 30% of global emissions3.

Another important topic at COP27 was the need for green energy alternatives to fossil fuels, mainly natural gas, green hydrogen, and nuclear energy. The global energy crisis, triggered by Russia’s invasion on Ukraine, has prompted many countries to look for other energy sources to replace the natural gas supplied from the East4. In the U.S., which is the second biggest greenhouse gas producer, nuclear energy is perceived as critical in tackling emissions and is explored to boost domestic supplies of nuclear fuel recycling5. The EU, on the contrary, has defined an ambitious hydrogen target of 20 MT by 2030 in response to the RePowerEU plan to phase out fossil fuel imports well before 2030. This includes a 10 MT target of domestic EU hydrogen supply, as well as a 10 MT target of hydrogen imports from outside the EU6.

Material transition & recycling

In terms of packaging materials transformation, the UN entities underlined the importance of international cooperation in carrying out trade route investigations and mutual legal assistance, which can help disrupt the cross-border flow of illegal plastic waste. With approximately 75% of all plastic produced in the world eventually becoming waste, often illegally burned for disposal in developing countries, the issue necessitates a comprehensive approach.

Key solutions in progress included international cooperation and partnerships across countries and UN agencies, specifically on plastic pollution; increased law enforcement to tackle illegal plastic waste; and the development of alternative materials. One of the discussed recommendations was for policymakers to implement stricter regulations related to single-use plastics globally. Another suggested solution was to extend producer responsibility on waste management and scope 3 emissions.

In terms of plastic waste management, COP27 participants emphasized the importance of focusing on reusable, biodegradable, and compostable plastics substitutes. As a result, the World Trade Organization is already preparing possible trade measures that the governments can implement to counter plastic pollution7.

Ambitious road ahead

In conclusion, going back to the initial question - can the supply chain industry meet the 1.5-degree goal by 2030? The answer is – yes, it can. By focusing, among others, on circular business models, switching to sustainable packaging materials, or optimizing energy sources using green energy alternatives, it is possible to effectively decrease the CO2 emissions while creating a closed-loop ecosystem. However, this ambitious plan calls on all parties – private, public, and non-governmental – to join forces and contribute to this positive change

At Nefab, we are finding new ways to achieve greater sustainability in our solutions and smarter ways to reduce the environmental impact. To deliver on our promise, we helped many companies in identifying potential CO2 and cost savings in their business model by using GreenCALC, a Life Cycle Analysis tool (LCA). Together with our portfolio of sustainable packaging materials, we believe this solution will help us save 10 million CO2 emissions in customer supply chains by 2026. Get in touch, to find out how.

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