McDonald’s strategy to power its logistics supply chain with renewables

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McDonald’s strategy to power its logistics supply chain with renewables

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In December last year, McDonald’s became the latest corporation to execute plans that reduce supply chain-related electricity emissions. 

McDonald’s and its five logistics partners, Armada, Earp Distribution, Martin Brower, Mile Hi Foods and The Anderson-DuBose Company inked a 189 MW virtual power purchase agreement (VPPA) with Enel North America to cover its U.S. logistics supply chain with solar power.

According to Enel, this is the first time a corporation has functioned as an anchor buyer for an aggregation deal specifically for its suppliers. That implies McDonald's will handle many of the legal and contractual aspects of the arrangement, simplifying the difficult procedure for its suppliers.

"They enabled smaller loads and smaller supply chain partners to be a part of what would otherwise be quite difficult for those types of partners to do independently," explained Marcus Krembs, Enel’s head of sustainability for the U.S. and Canada. "That's what made this deal unique and a first in the market."

McDonald’s is not the first corporation using its power as a convenor to reduce Scope 3 emissions (a.k.a. the indirect emissions not controlled by the reporting company). Increasingly, companies looking to decarbonize supply chains are providing resources and pressure to nudge suppliers to transition to clean energy. 

Notable examples include:

Apple, which aims to decarbonize its global supply chain by 2030, provides resources and live trainings, as well as engaging with suppliers to "identify effective solutions for renewable energy and carbon removal" to convert manufacturing partners to clean energy. According to the company, more than 200 suppliers have already committed to using clean power for their Apple production. 

Walmart is targeting its Scope 3 energy emissions through its Project Gigaton, which strives to avoid 1 billion metric tons (a gigaton) of emissions from the global value chain by 2030. Among its initiatives is the Gigaton PPA, where the retail giant plays matchmaker with interested suppliers to sign onto an aggregation deal. 

AB Inbev also works to bring suppliers together to address its Scope 3 emissions. In 2020 the beverage company launched its Eclipse platform to encourage its network to collaborate on shared sustainability goals, which includes water stewardship, circular packaging and smart agriculture.

Decarbonizing value chains is critical to addressing climate change. For most organizations, the vast majority of emissions are buried in Scope 3 — often accounting for more than 90%.

Organizations are increasingly calculating and setting goals to decrease these emissions, but it is a tricky business. Data is often hard to get and quantify, and buyers have limited ability to influence suppliers’ operations.

 

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