Powering Sustainable Business: The inside scoop

Environmental concerns continue to rise up the global business agenda, driven by the impact of climate change and demands for action from consumers and politicians. At a recent round table hosted by Epson, experts from around the world convened to discuss sustainability in business, and how to remain competitive whilst meeting ESG goals, and where the opportunities lie on the road ahead.  

Converting an established business into a sustainable, net zero entity is often more easily said than done though. That is particularly true in a country like Japan, which has an under-developed renewable energy sector.  

But technology company Epson has maintained ambitious environmental goals for several decades. In the 1980s it became the one of the first advanced companies in the world to completely abolish harmful CFC gases. Spurred on by the 2015 Paris Agreement, it set a goal of achieving 100% renewable electricity for its operations and achieved this in 2023. 

Climate challenge 

“Things were very difficult in the beginning. Japan has a poor penetration rate in terms of renewable energy. We discussed the matter with energy companies, but they did not have a ‘menu’ for selling renewable electricity,” said Junichi Watanabe, Managing Executive Officer of Seiko Epson Corporation. 

The role for renewable energy in achieving a carbon-neutral society led to discussions with energy companies over around two years, with the result being a “sales menu” of options. Epson has proven there is a long-term demand, and the energy companies are comfortable with their investments and, by 2021, its Japanese sites used exclusively renewable electricity. Two years later, by the end of 2023, all its group sites worldwide had achieved the same goal. 

But sustainability is not just about what a company itself does. Most businesses' gas emissions come not from their own operations but indirectly from their network of suppliers. These indirect emissions are known as Scope 3 emissions and were a central issue at a recent roundtable discussion on powering sustainable business, convened by Epson.  

As several participants noted, reducing Scope 3 emissions is often far more complex than adapting one’s own factories. 

“It's a lot easier to switch my own electricity than to get 40,000 suppliers to change their electricity,” said James Butcher, CEO of strategic consultancy innoScope. “Supplier engagement, communication and education is essential.” 

Collaboration and support 

The reality is that, if a business is serious about its environmental goals, it needs to bring its suppliers along with it, including many smaller companies who may lack the resources to act effectively on their own. 

“It is the duty of the ‘mother’ company to help their suppliers understand and communicate with them,” said Dr Ragini Roy, Global Programmes Director at the Centre for Big Synergy, a not-for-profit organisation that works on social, economic and environmental initiatives. 

This is an approach that Epson has also been taking. “Building mutually trusting relationships with our business partners in all regions of the world on the basis of fairness, equity and co-existence is essential,” said Watanabe. “Epson is also emphasising joint efforts with suppliers, rather than making unilateral requests to them.  We feel it is necessary for large companies to support SMEs in their activities.” 

However, engaging with suppliers can throw up unexpected issues. Supply chains are often opaque, and suppliers may not know the origin of some goods or the emissions involved. 

A recent survey by Ivalua found that 62% of US and European companies said their Scope 3 emissions reports were “best-guess” measurements, because their suppliers did not know what their own emissions were or where their own inputs came from. 

There are some tools that can help. The Sustainability Consortium’s Commodity Mapping Program, for example, can predict where a product might originate. “This is not a perfect tool, but it enables the company to start understanding where their supply chains are most likely to be,” said Dr Christy Slay, CEO of The Sustainability Consortium. 

Sustainable success 

The pressure for companies to understand their emissions will only increase, given how regulations are developing. The US Securities Exchange Commission has been weighing up new disclosure rules for Scope 3 emissions, while the European Commission has already issued a Corporate Sustainability Reporting Directive.  

Such considerations mean more companies will have to follow the likes of Epson in addressing sustainability issues. “While profit is necessary, it is not the first priority,” said Watanabe. “A company that makes a profit but destroys the environment has no reason to exist. Therefore, as a company, we need to put the creation of a sustainable society first.”