Supplier engagement to scale sustainability action in lower-middle income countries

2023 IHF Ashikaga-Nikken Excellence Award for Green Hospitals – Honourable Mention

Overview

Lower-middle-income countries (LMICs) are among the most vulnerable to the impacts of climate change, yet many companies are not actively reducing their emissions to mitigate global warming. For instance, Aga Khan University (AKU) found that among its 5,000 suppliers, major international companies have already set their net zero goals and are employing green initiatives, but firms in LMICs are lacking in sustainability actions.

Such a trend inspired the not-for-profit university to roll out a programme that incentivizes suppliers, especially manufacturers in the developing economies, to employ green actions and reduce their carbon emissions.

Challenges

There is a gap between many major international companies already having energy efficiency actions and net zero goals, and those in LMICs that have not taken major steps on sustainability. Reasons include the lack of policy frameworks and legal expectations, minimal skilled workforce in sustainability, and the absence of an enabling environment.

Another challenge which emerged is that that very few companies in LMICs have a dedicated person for sustainability.

Solution

AKU promoted the direct benefits and savings in carbon footprint reduction by sharing its own experiences and successes with decarbonization to the suppliers. It also made a conscious effort to work alongside suppliers instead of setting expectations that would put firms in LMICs at a disadvantage.

Six initiatives were rolled out under the programme, starting with the operational and supply chain emissions accounting in 2020, followed by the creation of its three emissions reduction targets. It later on informed suppliers about its net zero goals and gave its very own internal procurement staff proper training.

Impact

The overall goal of the initiative was to support manufacturers in LMICs to implement sustainability actions, specifically to reduce their emissions to help mitigate global climate change.

AKU is innovating and is leading by example to showcase what can (and needs to) be done for climate mitigation, even in LMICs (where the focus otherwise tends to be on climate adaptation). Through their supplier engagement, they can create a ripple effect that reaches well beyond their own operations.

Written by:

Renzo Costa