As one of the panelists at this year’s GreenBiz VERGE 22 event remarked,
“There is no more pride in reporting or setting goals around your company’s scope 1 or 2. Scope 3 is where the real work is at.”
Why would your company want to launch programs to reduce GHG emissions from any of the three defined scopes? The fact that the planet needs to get on a pathway to keep global warming under 1.5°C is almost certainly the overarching reason, which trickles down to other motivators, including increasing pressure for corporations to decarbonize their supply chains and set net-zero targets with more ambitious timelines. Beyond achieving sustainability commitments, there are also positive rewards behind scope 3 work, such as increased business resilience and brand consumer loyalty. Scope 3 is the place where you can truly scale your impact and relevance in today’s world.
While many companies have started their GHG accounting with categories that seem more approachable, like “business travel,” real progress can only be made if we embrace the opportunities and responsibilities that lie within our businesses’ scope 3 space. If your company truly wants to make a difference — if you are committed to helping keep global warming below under 1.5°C — you are probably asking yourself, “How do we do it? Where do we start?” In this article, we want to share some steps to help you get started.
Step 1: Screening for Relevance
According to guidance offered by GHG Protocol, companies need to start by reviewing 15 categories and sources of emissions to consider reporting and setting targets against. These categories include factors like purchased goods and services, upstream transportation and distribution, and processing of sold products, among others (a full list can be found here, published by GHG Protocol). According to data from CDP, founding partner of the Science-Based Targets initiative and a VERGE 22 contributor, not all companies review all the categories, although it is highly recommended to ensure that you have a comprehensive view of the emission categories that are relevant to your business.
A great place to begin this analysis is by reviewing purchased goods and services. A quick analysis of the GHG emissions in most companies reveals that a significant percentage of those emissions — on average 30% of total GHG emissions, according to CDP — falls into “Purchased goods and services.” Of course, for some companies, this is more straightforward than others. For instance, a company manufacturing goods that use large amounts of raw materials will find that purchased goods are the main source of its scope 3 emissions. In this instance, as for many companies, considering purchased goods may be one of the easiest ways to locate sources of significant emissions and lower them accordingly.
- How do you know where to look? Look for significant purchases that your business makes, and the main supplier agreements.
- How do you know what emissions are embedded in the goods you purchase? This is one of the key questions that many sustainability professionals are asking themselves, especially if they are new to scope 3 GHG accounting. Industry average emissions data from open databases, such as World Food Lifecycle Database, is often sufficient for initial screening for relevance across categories. You can access the database directly or through a sustainability partner, if your business has engaged one.
When reviewing emissions categories and identifying those that are material to your business, also consider the following questions:
- What categories does our organization have influence over?
- What categories pose significant climate-related risk to our company?
Step 2: Engaging Supply Chain Partners
Once you’ve identified the relevant categories of GHG emissions, you can now dive deeper into the categories housing the most emissions, as they are material to your business. The use of industry-default datasets in the first screening step is a handy shortcut to understand what is material, or most relevant. To build upon that work, companies in this second step of their journey select and engage with key suppliers to source data on their emissions and improve the granularity of their reporting. Here you have an opportunity to collaborate cross-functionally across sustainability, procurement, operations and other departments within your company, to engage with your key suppliers, and to share with them your interest in understanding your scope 3 footprint.
“What will become increasingly evident is that shared responsibility is inherent to scope 3 emissions, because it means all of us [in this industry] are accountable to addressing it correctly,”
said Simon Fischweicher, CDP Head of Corporations and Supply Chains for North America, during his “How to Calculate Scope 3 Emissions” tutorial at VERGE 22. “Working together - the collaboration we need to address climate change - is baked into what scope 3 emissions are all about.”
- How do you know which suppliers to engage? Look for suppliers that already have sustainability programs or have likely undertaken their own scope 1 and 2 audits. This will help you accelerate your progress to scope 3 GHG emissions measurement and reporting, and will allow you to leverage the learnings and experience of your suppliers while strengthening relationships with them.
- What do you do if your supplier has not collected their GHG emissions data yet? Scope 3 is a space that holds opportunities for increased levels of collaboration between companies and suppliers. As a part of your effort to measure scope 3 emissions, you may offer your suppliers technical assistance, access to tools or expert advice to undertake their own scope 1 and 2 inventory audit. In some industries, including agrifood, primary data is hard to collect. In some cases, alternative paths to accessing the data needed to underpin science-based scope 3 emissions measurement have been developed. Regrow’s Sustainability Insights product is an example of this; it enables agrifood companies to estimate their ingredient-specific emissions per supply shed on an annual basis.
Depending on your business and the categories of emissions that you identified as material, you may decide to set science-based targets or to start an emissions mitigation program directly or in partnership with your suppliers. Stay tuned for part two of this series, in which I’ll do a deeper dive into target-setting.