Jian Li
, Fang Xu
and Guowei Hua
School of Economics and Management, Beijing University of Chemical Technology, Beijing 100029, China
School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China
Low-carbon supply chain.
The concept of the low-carbon supply chain management is addressed in this paper. The benefits, the difficul-
ties, and the key issues of low-carbon supply chain management are investigated based on the supply chain
management theory. Finally, some public policies are proposed to support the implementation of low-carbon
supply chain management.
Global warming has already become a fact. Cli-
mate catastrophe caused by global warming, such as
flood disaster, food production reduction, eco-system
damage, etc, has seriously threatened human survival
and development. According to IPCC report, human
activities especially large burning of fossil fuel that
produces excessive greenhouse gases is the principal
cause of climate warming and consequently, the es-
sential thing in slowing down global warming is re-
ducing emission of greenhouse gases such as carbon
dioxide. Developing low-carbon economy is an in-
evitable choice to fight against climate change, en-
sure global energy security and achieve sustainable
social development. Developing low-carbon econ-
omy needs joint efforts of governments, enterprises,
individuals and various social organizations around
the world. A report titled The carbonemissions gener-
ated in all that we consume published by The Carbon
Trust shows that ”Consumer purchasing decisions are
the ultimate driver of carbon emissions in an econ-
omy. All carbon emissions can be attributed to the
delivery of products and services to meet the needs of
the consumer (CarbonTrust, 2006), so enterprises,
the providers of products and services play a quite
special role in the development of low-carbon econ-
Low-carbon is the only way for enterprises to de-
velop in the future. There are several issues that drive
enterprises to take actions to reduce carbon emis-
sions, including increase in energy cost, existing and
planned legislations which punish high energy con-
sumption and reward emissions reductions and chang-
ing consumer attitudes to climate change. A report
2008 by the World Resources Institute(WRI) and A.T.
Kearney, Inc. indicates that reduction of 13 to 31 per-
cent in earnings before interest and taxes (EBIT) was
projected by 2013, and 19 to 47 percent by 2018 for
fast-moving consumer goods companies that do not
develop strategies to mitigate the risk posed by envi-
ronmental pressures (WRI and A.T.Kearney, 2008).
At present, more and more enterprises have real-
ized the limits of enterprise’ inward-focused reduc-
tion strategies and are exploring to minimize the car-
bon emissions across the supply chain. As the exten-
sion of enterprise, supply chain management has been
successfully used in practice for years and its benefits
shownin weakening risk, reducing uncertainty, timely
response, increasing efficiency, lowering cost and im-
proving financial performance have greatly enhanced
competitive advantages. Reducing carbon emissions
across the entire supply chain and lunching carbon
reduce race” between enterprises in the chain can in-
crease reduction opportunities, lower capital invest-
ment and make more cost savings.
2.1 The Definition of Low-carbon
Supply Chain Management
Carbon footprint of a product is greenhouse gases
Li J., Xu F. and Hua G..
DOI: 10.5220/0003578204970501
In Proceedings of the 13th International Conference on Enterprise Information Systems (DMLSC-2011), pages 497-501
ISBN: 978-989-8425-55-3
2011 SCITEPRESS (Science and Technology Publications, Lda.)
emissions over the whole life of a product or service,
from the extraction of raw materials and manufactur-
ing right through to its use and final reuse, recycling
or disposal. It can be seen that the carbon footprint
of a product is throughout its entire supply chain.
Therefore, Low-carbon Supply Chain Management
(LCSCM) can be defined as: consider carbon emis-
sions over the product lifecycle involving raw ma-
terial suppliers, product manufacturers, distributors
and retailers, users and recyclers and make the sup-
ply chain achieve economic benefits while reducing
carbon footprint. Low-carbon supply chain manage-
ment extends the ”carbon management” pattern that
only for a single enterprise or a single plant, inte-
grates multiple enterprises as a joined-up process and
emphasizes the cooperation between upstream and
downstream and the output of low-carbon products.
The comparison of ”single enterprise carbon manage-
ment” and ”low-carbon supply chain management” is
shown in figure 1:
Figure 1: Single enterprise carbon management low-carbon
supply chain management.
2.2 The Relationship between
Low-carbon Supply Chain
Management and Green Supply
Chain Management
Low-carbon supply chain management is closely re-
lated to green supply chain management. In 1996, the
Manufacture Research Consortium (MRC) in Michi-
gan State University who had an ”Environmental Re-
sponsible Manufacture” research item then first put
forward the definition of Green Supply Chain Man-
agement (GSCM). As a modern management pattern,
the GSCM, based on the theory of green manufactur-
ing and supply chain management technologies, con-
siders environmental impact and resource efficiency
in the chain, covers suppliers, manufacturers, sellers
and customers and is to minimize the negative impact
on environment and maximize the resource efficiency
in the process of raw material sourcing, manufactur-
ing, packaging, warehousing, transport, use and final
disposal (Dan and Liu, 2000) . GSCM is an impor-
tant means that can improve environmental efficiency
and achieve a coordinated development of economy
and environment. Nevertheless, LCSCM is to address
the greenhouse gases which cause global warming,
to reduce the carbon footprint of products and finally
to mitigate the environmental impact of greenhouse
gases by improving energy efficiency, developing al-
ternative energy sources, new energy and emissions
reduction technology. Low-carbon is a global prob-
lem and is to response to climate change, while the
starting point of green concept is the industrial pollu-
tants bring the damage to people’s health and our liv-
ing conditions, until now, no country except US has
regulated greenhouse gases as pollutants. LCSCM is
not quite consistent with GSCM, although with simi-
larity in energy saving, the former is to reduce green-
house gases emission but the latter is to reduce pollu-
tants emission including solid pollutants, liquid pol-
lutants and gaseous pollutants, so it needs integrating
greenhouse gases emission control into the air pol-
lution prevention. Green supply chain management
research has made a great development and the cor-
responding theories and methods for GSCM have a
reference value to LCSCM.
Reducing carbon emissions from supply chain per-
spective and integrating ”carbon management” with
supply chain management together can achieve more,
faster, better, cheaper effect. Enterprises that plan
to implement low-carbon supply chain management
need to reintegrate their supply chain.
3.1 The Benefits of Low-carbon Supply
Chain Management
A McKinsey study 2008 shows that about 40 to 60
percent total carbon footprints reside upstream in their
supply chains-from raw materials, transport, packag-
ing to energy consumed in manufacturing processes
for high-tech companies and manufacturing indus-
tries,while reaching 80 percent in retailing (Mckins-
eyCompany, 2008) , therefore, any significant carbon-
abatement activities will require collaboration with
supply chain partners. Considering all stages of sup-
ply chain and implementing low-carbon supply chain
ICEIS 2011 - 13th International Conference on Enterprise Information Systems
management can avoid counter-productive trade-offs
between supply chain stages and improve the overall
carbon of the supply chain.
In terms of corporate citizenship or corporate so-
cial responsibility (CSR), many world leading busi-
nesses with global operations have been committed to
reduce emissions on their supply chains and achieved
great results. Wal-mart has been dedicating to create
a more transparent supply chain, drive product inno-
vation and ultimately provide his customers with in-
formation they need to assess products’ sustainabil-
ity by developing the sustainability index. The com-
pany’s Sustainable Value Networks helped reduce
carbon emissions through partnerships that extend be-
yond Wal-Mart’s walls to include collaboration from
nonprofits, suppliers, and other environmental stake-
holders spanning from governmental officials to aca-
demics and finally produced up to 30 percent fewer
greenhouse gas (GHG) emissions by 2009 globally
(Wal-mart, 2010) . According to Business for Innova-
tion climate & Energy Policy(BICEP, BICEP Mem-
bers), World famous company Nike has been focused
on reducing its environmental footprint for well over
a decade, in addition to measuring the company’s en-
tire carbondioxide footprint, it also measures its prod-
uct footprint. It estimates the embedded carbon in its
products to be equal to 2.5 times the carbon emitted
by the footwear factories making the products, a con-
clusion which led the company to consider alternative
materials in the design process. Given that the trans-
port operations which move Nike product from the
point of manufacturing to the distribution centers ac-
count for about 25 percent of Nike’s CO2 emissions,
the company has set a target to reduce the inbound lo-
gistics footprint by 30 percent from a 2003 baseline
by 2020.
3.2 The Difficulties of Low-carbon
Supply Chain Management
The implementation of low carbon supply chain man-
agement will face significant obstacles:
(1) Awareness side: Now many companies have
not realized the impact of climate change on their fu-
ture development. A Mckinsey survey of more than
2000 global executives finds that while nearly half of
respondents say that climate change is a somewhat
or very important issue to consider in purchasing and
supply chain management, fewer than one-quarter re-
port their companies always or frequently take cli-
mate change into consideration. In addition, some
companies can not afford the upfront investment in
emission reduction. Thus, it is not easy to reach a
consensus on emission reduction issue for enterprises
in supply chain.
(2) Action side: It will take a course to put low-
carbon supply chain management into practice. On
one hand, imperfect market and agent problem can be
significant barriers to embody LCSCM. On the other
hand, LCSCM that need a strategic reintegration on
traditional supply chain will touch on the interests of
some stakeholders. The partner selection and Logis-
tics Network Configuration in the re-design of supply
chain structure will undoubtedly affect the stable op-
eration of current supply chain. Furthermore, it will
become more complex in LCSCM globally optimiza-
tion problem considering both economic and environ-
mental factors. So to speak, it should be a big job
to build low-carbon supply chain for most decision-
(3) Legislation and policy: In the past two
decades, global commerce has come to depend on an
intricate web of supply chains. On the issue of cli-
mate change, Annex I countries commit themselves
to a reduction of greenhouse gases, while Non-Annex
I countries are not obligated by the limits of emis-
sions in the Kyoto Protocol, moreover, national poli-
cies and standards made by different countries differ-
ing with each other will ultimately pose a challenge to
the concept and objective integrating for global sup-
ply chains.
3.3 The Key Points of Low-carbon
Supply Chain Management
By analyzing the difficulties of implementing low-
carbon supply chain above, some proposals are pro-
vided with the theory of supply chain management as
3.3.1 Playing the Leading Role of Core
Enterprise and Adopting Low-carbon
Most of the supply chains are built around core enter-
prises and core enterprises play a significant part in
the process of reengineering low-carbon idea. Core
enterprises should have a sight into what LCSCM
could lead in the direction of future competition, es-
tablish low-carbon idea and vigorously promote low-
carbon activities to make other partners understand
the low-carbon connotation, the necessities and possi-
bilities to implement low-carbon and the benefits of-
fered by strengthening ”carbon management” such as
risk avoidance of public policies and cost saving, etc .
3.3.2 Emphasizing Cooperation between
Enterprises in the Chain
LCSCM is based on cooperation, not only requiring
all enterprises to take effective measures respectively
such as staff training, energy efficiency and prod-
uct process improvement, etc, but much more impor-
tantly, building on ”carbon management” across the
supply chain. Strengthened cooperation between en-
terprises in the chain can attain greater abatement op-
portunities and create larger profit space.
(1) Sharing information and knowledge, devel-
oping strategies together. Enterprises should ex-
pand companies’ borders, incorporate other part-
ners in the chain and make joint efforts to explore
means to minimizing emission by strengthening inter-
communication and exchanging views on environ-
mental issues and actions to be taken. For example,
sharing the information of products carbon footprint
that can be get by measuring carbonemitted by supply
chain stages can help enterprises understand carbon
emission condition of their own and the entire sup-
ply chain, can help identify the main emission source
which can also be interpreted as emission reduction
opportunities and then make carbon reduction strate-
gies by weighing the costs and opportunities, and
can help make a reasonable decision on the questions
of product development, procurement, manufacturing
and distribution.
(2) Developing emission trading between enter-
prises along the supply chains. According to emis-
sion trading, companies that exceed the emission cap
allocated by a central authority can buy credits from
companies who require fewer permits to meet their
increases in emission permits. Due to the good long-
term cooperation relations, emission trading between
enterprises in the supply chain can help to reduce
transaction cost and lower risk.
3.3.3 Considering the Cost of Carbon in Supply
Chain Optimization
Price for carbon has become a reality, or through car-
bon taxes or carbon trading. As an important impact
factor in the total cost of any product, it requires com-
panies to consider the cost of carbon as a key per-
formance indicator. Except for applying theories and
methods of modern supply chain management such
as inventory control, supply contracts, distribution
strategies, the cost of carbon and the risk of volatile
carbon price should be taken into account in supply
chain integration and optimization.
3.3.4 Life Cycle Assessment Method
According to the ISO 14040 and 14044 standards, as
one of the methods being developed, LCA (life cycle
assessment) addresses environmental aspects and po-
tential environmental impacts throughout a product’s
life cycle from raw material acquisition through pro-
duction, use, end-of-life treatment, recycling and final
disposal, i.e. cradle-to-grave. LCA Method can also
be used to analyze carbon emission at various points
in low-carbon supply chain which will help to con-
struct the carbon footprint, identify emission reduc-
tion opportunities and support ongoing implementa-
tion steps.
Strengthening cooperation and making joint efforts
between enterprises across the supply chain will be
important, but government involvement must be more
critical to put LCSCM into effect. Various coun-
tries in the world have already set reduction targets
by participating in controlling emission with a posi-
tive stance and fulfilled it concretely to development
strategies and policies, the EU, for example, who has
set a target that 2020 emission level should be 20to
do still, we make the following recommendations in
order for LCSCM to be effective.
(1) Making carbon emission as one of the crite-
ria in the government and public sector procurement
which will guide companies’ management idea.
(2) Making international worldwide carbon emis-
sion measurement standards to avoid divergence and
emission reduction failure.
(3) Advancing product carbon footprint label and
product carbon levels standards of different industries
at different development stages to motivate compa-
nies to control carbon emission and meanwhile enable
customers to identify low-carbon products.
(4) Providing consistent subsidies for low- or no-
carbon alternatives and penalties for high consump-
tion and high emission to encourage companies in
emission reduction.
(5) Other incentives, for example, investing IT in-
frastructure and transportation networks.
ICEIS 2011 - 13th International Conference on Enterprise Information Systems
Global warming has seriously threatened to hu-
man survival and development and mitigating global
warming is a matter that admits of no delay for
mankind. Low-carbon choices are the future develop-
ing tendency and enterprises can implement LCSCM
to cost-effectively abate greenhouse gases emission
through cooperation with other partners in the chain.
It is worth noting that, the successful operation of
LCSCM largely depends upon the common efforts of
government sector and enterprises sector, therefore,
in addition to the strategic and operational decisions
enterprises can take with respect to their own sup-
ply chains, engaging in public policy frameworks is
significant for both stabilizing the global climate and
staying credible.
CarbonTrust (2006). In The carbon emissions generated in
all that we consume.
Dan, B. and Liu, F. (2000). In Research on green supply
chain and its architecture. Chinese Mechanical engi-
MckinseyCompany (2008). In Climate change and supply
chain management.
Wal-mart (2010). In Wal-mart Global Sustainability Report
2010 Progress Update.
WRI and A.T.Kearney (2008). In Rattling supply chain.