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As the world races to decarbonize, supply chains are emerging as one of the most critical and complex frontiers in the journey toward net-zero. For most companies, especially those operating in emissions-intensive sectors like manufacturing, apparel, automotive, or consumer goods, over 70% of their total carbon footprint lies beyond their direct control. These emissions, known as Scope 3, originate from suppliers, logistics providers, and the use of downstream products. The path to achieving a truly net-zero business, therefore, runs squarely through the supply chain.
The push to decarbonize supply chains is not driven by moral obligation alone. The economics are shifting. Governments are tightening regulations, investors are scrutinizing ESG metrics more closely, and customers are increasingly demanding transparency and accountability. Net-zero supply chains have become a strategic lever, impacting risk profiles, competitiveness, capital access, and even talent retention. They are now central to how companies define long-term value and resilience.
Transitioning supply chains to net-zero comes at a cost. Companies must rethink procurement practices, collaborate deeply with suppliers, redesign logistics networks, invest in digital infrastructure, and comply with evolving disclosure norms. This can mean adopting cleaner technologies, enabling suppliers through training or low-carbon materials, setting up traceability systems, and meeting stringent certification standards.
In developing economies like India, the challenge is exacerbated by the prevalence of small and medium-sized enterprises (SMEs) in supply chains. Many SMEs operate with thin margins and limited access to green technology or finance, making the leap to low-carbon operations daunting.
However, data is shifting the perception that this is prohibitively expensive. Global research indicates that net-zero supply chains can be achieved at a cost of just 1% to 4% of total revenues for many companies. Efficiency gains, reduced resource waste, and early access to green capital often offset upfront investments. Moreover, first movers often secure long-term contracts from ESG-conscious buyers and open doors to premium markets.
Despite the benefits, the transition isn’t without risks. Lower-tier suppliers often lack the technical expertise and funding to decarbonize independently, raising concerns of exclusion from global value chains. Data gaps also remain a major barrier; reporting Scope 3 emissions is notoriously complex due to inconsistent methodologies and opaque supply structures. Without reliable data, companies risk greenwashing accusations and poor decision-making.
Regulation is another key driver. Mechanisms like the EU Carbon Border Adjustment Mechanism (CBAM) and enhanced climate disclosure rules by the U.S. SEC are changing the cost structure of exports. Indian exporters to Europe, for example, will soon face carbon-linked tariffs unless their products are backed by verified emissions data.
Companies with low-carbon and traceable supply chains enjoy easier market access, meet the ESG mandates of global investors, and are more resilient to carbon price shocks. Decarbonisation often strengthens supply chain resilience and helps climate-smart suppliers adapt faster to physical climate risks, and use resources more efficiently.
Socially, the shift pays off too. Consumers increasingly seek brands that stand for sustainability. Purpose-driven companies also find it easier to attract and retain talent.
As a fast rising global manufacturing hub, India is uniquely positioned to lead in green supply chain innovation. Regulatory signals like SEBI’s BRSR Core requirements and the RBI’s climate risk guidelines show strong policy momentum. But the country’s vast MSME base will need tailored support, finance, technology, and capacity building to actively participate in the transition.
This is where capacity-building initiatives play a decisive role. The IIM Kashipur & evACAD offered PG Executive Program on Net Zero and Sustainability Leadership is one such initiative equipping business leaders, sustainability managers, and supply chain professionals with the skills to navigate this shift. The program blends practical ESG strategy, net-zero value chain design, and regulatory compliance training with case studies from India and abroad. By bridging the knowledge gap, it helps companies future-proof operations, meet global disclosure requirements, and collaborate effectively with suppliers on decarbonisation.
Net-zero supply chains are not just about emissions; they are about redefining how businesses create and share value in a carbon-conscious world. While the journey is complex, the long-term rewards, resilience, competitiveness, and credibility far outweigh the short-term costs.
In a global economy where climate accountability is fast becoming a trade requirement, those who invest in transformation today will not only protect their market share but also position themselves as leaders in a greener, fairer economy.
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