First Movers Coalition: Unlocking the power of procurement to meet net zero

Addressing the climate challenge has never been more urgent. Climate commitments continue to grow among the global Fortune 500 companies, with nearly 40% setting a net-zero target in 2022. However, only two-thirds include Scope 3 or value chain emissions within their climate commitments.

With companies’ supply chain generating 11.4 times more emissions than in-house operations, addressing Scope 3 emissions can be a game changer. As the company’s primary interface with the value chain, the procurement function is uniquely positioned to lead the company’s decarbonization efforts. Companies can cascade their climate commitments throughout the supply chain and influence suppliers’ environmental performances by incorporating emission reductions into purchasing decisions.

The procurement function has often been seen as process-oriented and risk-averse, with a strong emphasis on cost reduction. The “reliability” of procurement has been defined by the ability to acquire the right products with the right price, quality and time. The “accountability” of procurement practices is predicated on demonstrating the best value for money. However, the climate crisis is creating consistent variability in the supply chain, requiring the adoption of nascent and breakthrough technologies not yet at scale that introduces new risks to companies.

The First Movers Coalition (FMC) is leveraging members’ collective purchasing power to accelerate the adoption of emerging climate technologies to decarbonize the world’s heavy-emitting sectors. To leverage procurement as a critical lever, there needs to be a fundamental transformation in procurement processes, capabilities, strategies, and toolkits. At the heart of the transformation, lies a group of important actors, whose ability to drive the net-zero agenda is often underacknowledged. Chief Procurement Officers (CPO) are facing a unique opportunity to lead in executing the transition. To do so, the CPO function and leadership capability needs to transform in its approach to risk and how they embrace new technologies, suppliers and business models at a speed and scale as never before.

The FMC has collaborated with Egon Zehnder in laying out the change journey that CPOs must lead to tackle climate challenge. The report showcases the necessary organizational transformation that the procurement function must lead with, new value creation models, new ways of collaboration and communication, as well as new technologies to make data-informed decisions. In addition, CPOs are also adopting new leadership capabilities to drive the organization’s net-zero agenda.

To enable FMC members to meet their commitments, “Streamlining Procurement” was established as one of the key FMC programmatic activities offering a range of procurement support, from highlighting best practices, designing procurement guidelines, and launching innovative challenges to surface near-zero technologies. At the World Economic Forum Annual Meeting in 2024, the FMC Trucking and Cement & Concrete sectors are launching two important pieces of work. The Sustainable Logistics Procurement Playbook and the Cement and Concrete Procurement Guide aimed at equipping procurement functions with the know-how for adopting clean energy technologies to decarbonize the two hard-to-abate sectors.

The freight industry, eager to decarbonize fleets and tackle Scope 3 emissions, faces a challenge in navigating the procurement of new and clean technologies or services. Recognizing this, industry leaders have joined forces to elaborate guidelines. As part of FMC Trucking, 15 members committed to purchase or contract zero-emission medium and heavy-duty vehicles by 2030.

To support the realization of these ambitious commitments, the FMC joined forces with Smart Freight Centre’s Sustainable Freight Buyers Alliance (SFBA) and Implement Consulting Group to create the Sustainable Logistics Procurement Playbook. The playbook guides shippers and freight buyers in optimizing sustainable logistics procurement by aligning with recognized standards.

Drawing from leading companies' best practices, it provides practical guidance on what changes to the existing procurement processes we need to make and why. The aim is to streamline the procurement process, identify key sustainable criteria, and foster collaboration, thereby advancing climate action initiatives in logistics services.

Meanwhile, the Cement and Concrete Procurement Guide is a product requested by FMC members . It is currently appropriate for the sector due to the nascent understanding of various cement and concrete-related emissions accounting issues and the highly regionalised nature of the market, limiting the opportunity for collaborative RFPs.

Produced with FMC knowledge partners BCG, and in collaboration with FMC Cement and Concrete members, suppliers to the sector, GCCA and IDDI, the guide covers which Product Category Rules (PCRs) across various geographies should be used as a starting point in order to develop Environmental Product Declarations and reach FMC thresholds. Given these PCRs do not take carbon capture, usage and storage (CCUS) into account, the guide highlights emissions-related issues for procurement teams to consider when completing offtakes.

These include CCS, CCU, carbon accounting mechanisms, alternate fuels, recarbonation and carbon insets. The guide also provides a list of important external resources as wider work on harmonizing PCRs and establishing regulatory clarity on CCUS use within cement and concrete continues.

By COP28, the FMC has grown from 30 members when it was launched in 2021 at COP26 to 95 members, with 120 commitments to decarbonize the hard-to-abate sectors. While making commitments is the crucial first step, FMC aims to support members in meeting their commitments through various levers, including procurement. With its strong ties with suppliers and customers, cross-functional reach and access to detailed supply and demand market data, the power of procurement in driving the net-zero agenda needs to be unlocked.