The Push Down Effect

The Push Down Effect takes place when requirements of your customers or clients are “pushed down” onto your company. You in turn may “push down” those requirements onto your suppliers. This may continue down multiple levels like a cascade.

One instance of the Push Down Effect that we’re starting to see is in relation to carbon reporting. Large companies are requiring their direct supply chain suppliers to provide their own actual carbon emissions data. This is required under what is known as Scope 3 of the Greenhouse Gas Protocol, where Scope 3 accounts for all input costs other than fuel and electricity.

The Push Down Effect will become more prevalent in the coming months with the mandated requirements of large corporations to report their actual Scope 3 emissions. Coles, for example, announced in August 2023 that they will be requiring 70% of their suppliers by dollar value to provide actual carbon emissions data by 2026. 

The challenge for suppliers is in requiring their suppliers to provide the same data. So, whilst the legislation refers only to large corporations required to report their carbon emissions from 1 January 2025, their suppliers and their suppliers will soon be caught up in the Push Down Effect.

Don’t wait until your clients or customers ask you for your data, leaving you to scramble around in a short space of time to meet their requirements. Better to be one step ahead and start carbon reporting now so that the information is readily to hand when you need it and you can also show what you are doing to reduce emissions.

John (not his actual name) came to me earlier this year after one of his overseas customers asked about their carbon footprint and advised that they were sending out a representative to inspect their business operations and discuss both their carbon footprint and the initiatives they’ve undertaken to reduce carbon emissions. He had already lost one potential new overseas client having been unable to provide the information they required as part of the due diligence process for their contract. He didn’t want to risk losing the existing customer. We worked with John and his team and put together a carbon report in time for the inspection visit. The inspector told John off the record that his business operations, his carbon report and initiatives for carbon reduction were the best he’d seen.

Are you going to be on the receiving end of the Push Down Effect? Are you going to have to start “pushing down” onto your suppliers too?

Want to learn more about how to get ahead of the Push Down Effect?

Join me on my free webinar to find out how.