Is your net zero commitment on track? Engaging with your supply chain to reduce Scope 3 emissions
Scope 3 emissions present the biggest opportunity for organizations to reduce their carbon footprint, our ESG Advisors share key learnings from our own reduction efforts.
The Intergovernmental Panel on Climate Change (IPCC) assessment report out last month sounded the alarm; we must now be moving from pledges to tangible fast-track action. No business can reach publicly declared net zero commitments without tackling their Scope 3 carbon emissions reductions now.
We know this because it’s something we’re keenly aware of in our own business. In our 2022 financial year, 96% of our total emissions were generated through our supply chain (Scope 3). Only 2% of our emissions come from business travel (Scope 3) which significantly reduced post-pandemic; and the final 2% is made up of operational emissions (Scope 1 & 2). If we focussed our efforts solely on Scope 1 and 2, we would fail to make the significant climate impact that could be made by addressing Scope 3.
This is critical for us and other organizations who want to lead when it comes to climate action. Our net zero targets are validated by the Science Based Targets initiative (SBTi), a necessary step to ensure our decarbonization plans are aligned with climate science and make a real impact. To do our part, businesses like us with Scope 3 emissions comprising over 40% of their total carbon footprint (applicable to most organizations), are now reporting on our Scope 3 reduction efforts to achieve science-based net zero.
Most businesses are robustly tackling the relatively ‘quick and easy’ wins by reducing Scope 1 and 2 carbon emissions that are within direct control. However, there is more hesitancy around Scope 3 improvements as they are not something a business can dictate. Scope 3 reductions are achieved through influence and using increasingly stringent contractual levers to drive impact and change. By its very definition, Scope 3 is more ambiguous, and therefore less controllable as a liability and/or risk.
For a more in depth look at Scope 3, check out An introductory guide to Scope 3 emissions by the Carbon Trust
Key takeaways: how businesses can start addressing Scope 3 carbon emissions – based on our own experience
- Perfect is the enemy of good, so screen early with rough calculations. This will quickly allow you to start creating your plan and understanding where to focus your time and effort.
- The key data already exists. Businesses know how much they spend with suppliers and subcontractors. Use this as the basis for rough calculations to assess your initial carbon emissions by proxy. Identify and work with the right people in your organization to unlock your data (e.g., finance, operations, etc.).
- Set realistic expectations and reduction plans with suppliers. Reducing Scope 3 carbon emissions cannot solely be the responsibility of your supply chain. Organizations have a duty of care and responsibility to raise their expectations incrementally with phased plans for implementation and an open supportive approach that bring suppliers with them. Awareness and training are the watchwords.
- Make the most of publicly available tools.
Both the GHG protocol and SBTi initiatives provide helpful guidance and webinars for businesses wanting to tackle Scope 3.
- Replace rough calculations with real data. As your supplier engagement process progresses, real data can replace the rough data used initially. As you develop learnings and more robust data, carbon intensity criteria can then form part of future procurement and supplier selection processes.
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