Professor Frederick Dahlmann, Warwick Business School, together with colleagues Stephen Brammer and Jens K. Roehrich of the University of Bath explore the paradox of recent demands for transparency from corporations on their greenhouse gas emissions

In the Green Paradox: Achieving balance in emission reduction strategies by CoBS Editor Ana Sofia Bello. Related Research: Navigating the “performing-organizing” paradox: tensions between supply chain transparency, coordination, and scope 3 GHG emissions performance, Frederik Dahlmann, Stephen Brammer and Jens K. Roehrich, International Journal of Operations & Production Management, Emerald Insight, DOI 10.1108/IJOPM-09-2022-0622.

Emission Reduction Strategies: Transparent realities

In the past decade, we have seen a plethora of companies called out for unsustainable practices whether these companies range from SMEs to large multinationals. This is partly due to the emergence of consumers and buyers as a strong force for change, especially regarding sustainability.

The popular conclusion is to demand more transparency from companies to be able to hold them accountable. Transparency is understood as a critical first step towards improving carbon performance. But are there any drawbacks that come with this call to increased transparency?

Profs. Dahlmann, Brammer, and Roehrich unveil an organizing-performing paradox that presents the pitfalls of transparency for a corporation. Indeed, companies are caught in a position where they are unsure whether this transparency is beneficial for the company and its operations even when there is high demand to do so. In this light, the study offers valuable insights into the connections between supply chain transparency, and supply chain coordination, and how they influence a company’s indirect greenhouse gas (GHG) emissions.

Tensions unveiled

The growing demand for transparency has become another responsibility that is expected of companies. Monitoring and reducing indirect emissions are key measures of sustainability performance that companies are now expected to balance. But, has this popular demand been proven to improve sustainability performance? Unfortunately, there is no agreement on whether such transparency leads to any progress in decreasing carbon emissions. However, research indicates that enhanced transparency indeed has the capacity to result in long-term improvements in sustainability performance.

Tensions arise between societies, organizations, and companies most notably because the expectation for companies to reduce emissions is extremely challenging for them to satisfy. Research shows that companies that provide this transparency tend to already have a relatively low carbon footprint, implying that they may be influenced by the perception of their overall GHG footprints when deciding to disclose additional emissions data.

Moreover, effectively handling indirect GHG emissions demands a level of coordination and collaboration that may conflict with the scrutiny and governance levels mandated by transparency initiatives. This ultimately makes it more complicated for companies to be willing to comply, potentially putting at risk their image and positioning with competitors.

One solution to this is that organizations and societies that wish to reduce their companies’ GHG emissions must understand how each company operates and fabricate more customized guidelines to address firms’ needs to create a more sustainable approach to their business.

Greening the supply chain

Profs. Dahlmann et al. find that general green supply chain management (GSCM) plays a significant role in impacting a company’s emissions by fostering environmental awareness and engagement throughout the company. This is achieved through the establishment of collaborative relationships with suppliers, concentrating on methods to enhance and comprehend their environmental footprint.

Indeed, studies indicate that the most robust and noteworthy correlation with a company’s choice to disclose transparency on GHG emissions originates from GSCM practices. Cooperating with these practices leads companies on a path to a more sustainable corporation by implementing sustainable technologies, educating and training employees, and including environmental concerns in contracts with suppliers. And these responsibilities and practices help to guide firms towards more transparent supply chain relations.

As such, the findings of this study imply that companies should establish efficient processes tailored to achieve sustainability objectives, where the processes of supply chain transparency and coordination directly impact performance outcomes. It also suggests firms take a long-term perspective and effectively communicate the differences involved in reporting their emissions performance to avoid unwarranted criticism.

Sustainable Supply Chains: From theory to practice

Being one of the first to apply paradox as a meta-theory to a large-scale quantitative analysis of firms’ supply chain sustainability, Profs. Dahlmann, Brammer, and Roerich acknowledge that there is still a lot to learn regarding this subject. Further studies are needed to focus on specific industries and firms located in other parts of the world. And there are different factors and regulations that are present in certain industries and countries that have an influence on a firm’s sustainability practices and the demand for transparency.

On an internal level, managers are advised to understand the features of this tension or paradox, as it influences the perception and management of emissions performance. Negative perceptions of a firm’s performance should be anticipated – and communicated internally and externally more clearly to avoid unnecessary and preventable tensions with stakeholders and their demands.

Transparent transitions

Recognizing the paradoxical nature of sustainability efforts in supply chains is vital for companies navigating the challenges posed by the climate crisis and other sustainability matters. As we witness a surge in firms facing criticism for unsustainable practices, fueled by an increasing demand for transparency from buyers and other organizations, the need for effective communication becomes evident.

For Frederik Dahlmann et al., firms would be wise to anticipate and address negative perceptions of their performance, extending clear communication not only to supply chain partners but also to customers, investors, and other stakeholders.

But while collaborative coordination is essential on a global scale, individual companies are deterred from transparent reporting due to potential damage to external perceptions. Creating a delicate balance between transparency and managing external perceptions is crucial, demanding strategic communication and a unified commitment to sustainable practices across industries and borders.

Useful links:

• Link up with Profs. Frederik Dahlmann, Stephen Brammer, and Jens K. Roehrich on LinkedIn
• Read related articles: Greening up supply chains using agile sustainability governance and How can supply chain emissions be reduced?
• Visit our friends at the Harvard BiGS Institute and read a related article: Money talks: Banks can accelerate decarbonization, research shows
• Discover Warwick Business School.

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