According to the CDP’s latest Supply Chain report, the emissions located in the supply chain are on average four times as high as those from direct operations. Scope 3 emissions – that is, indirect upstream and downstream emissions that occur in the value chain – are increasingly important in being tracked and monitored. After all, firms that join the Science Based Target initiative (SBTi) must set ambitious Scope 3 targets when these emissions are more than 40% of an organisation’s total carbon load.
With apparel brands, for example, up to 90% of emissions come from the value chain, and while multi-tenure landlords are making efforts to cut emissions from their offices and fleet, this is dwarfed by their oft-reported +99% Scope 3 emissions.
But there are opportunities to be had by reducing supply chain-based emissions. As Cynthia Cummis, WRI’s director of private sector climate mitigation and member of the SBTi steering committee says in reference to apparel: “Companies share many of the same suppliers, so setting ambitious value chain targets will open up a great deal of opportunity for collaboration, innovation and efficiency across the industry.”
CDP’s report notes that companies are increasingly working on it, with more than a third (34%) of responding suppliers disclosing Scope 3 emissions. Meanwhile, less than a quarter (23%) of suppliers who responded said they engage their own suppliers on emissions reductions. So, as the report points out, this is an as-yet largely untapped source of cost savings from carbon emissions.
While companies focus more on the emissions they are more able to influence, looking at Scope 3 can offer a lot to an emission-cutting strategy by demonstrating leadership, mitigating risks and keeping stakeholders happy.
But how, when it is tricky to manage and measure Scope 3 emissions, can companies go about that?
Well, althought most Scope 3 categories being absent from SBTi’s online tool, the method can still help companies identify carbon ‘hot spots’ in their value chains. In order to identify these hot spots, the Science-based Targets Setting Manual says constructing a Scope 3 inventory is critical. It points to the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) on how to complete an inventory. By answering questions about their organisation and activities – such as procuring goods and services and transporting materials – companies of any size can gauge their Scope 3 inventory.
However, after initially using the tool’s data set, companies should endeavour to collect primary data for those areas shown to be a significant source of emissions.
With an inventory at their fingertips, firms can pinpoint the emissions source categories to address, and then devise a target and level of ambition.
Software is an effective and increasingly essential tool in mapping impacts beyond a company’s own operations. UL’s Product Supply Chain Intelligence solution, for example, has information on thousands of ingredients, materials, components and finished products, so companies can make informed decisions about the materials they use in their products. Or the PURE Supply Chain solution allows firms to communicate with suppliers, identify risks and drive improvement, all in real time.
Simply gauging a baseline for Scope 3 emissions can be challenging, which is why collecting data from suppliers and engaging with them is key to setting ambitious targets.