Transforming the value chain

A while back I did mention about the world being stuck in the traditional, carbon-intensive value chain and so decarbonising the world is a lot about transforming entire value chains and ecosystems. This means changing relationships across the markets and the world. Imagine when you change your production pathway for the goods you produce, you need to negotiate with new set of suppliers, source for new materials, come up with new structures for your companies and maybe engage different logistics partners. It is a lot of overhauling to do.

And that is why most companies won’t. Even when they know that the disruption is coming. They choose to keep their original identity and to think that the current set of value chain, suppliers, and relationships are what makes the business. To change all that is to tear down the entire business. In some sense, it is true. But consider that if you’re not tearing down the business, you might be tearing down the planet.

Besides regulations coming in to force these changes, another means is to change the identity that is held in the minds of the existing players. Many of the Oil & Gas companies are trying to lead this change by seeing themselves as a energy supplier as opposed to just providing fuels. This led them directly into power generation or other energy technologies supposing that they are not just green-washing. Banks are beginning to emphasize their green credentials but it is vital that their products, services and loan criteria starts following their claims.

It is not an easy journey and that is why many newer players in the market have taken it upon themselves to realign the value chain and actually build it up from scratch. SpaceX is a good example of how Elon Musk basically rebuilt the supply chain to produce rockets after discovering how expensive and broken the previous supply chain was. The same will happen in the space of green technologies, of new manufacturing processes that reduce waste and use more sustainable materials.

But this future can only be made if the consumers also start caring about how their goods and services are produced.