Scope 3 carbon emissions can account for up to 95% of the overall carbon footprint for some businesses. You don’t have direct control over them so their reduction can be challenging, but there are ways to get to grips.
Why should your business address Scope 3 carbon emissions?
Extreme weather events such as hurricanes and wildfires will disrupt both your supply
chain and operations (e.g. excessive energy consumption, waste creation, unnecessary process steps, etc.) As a result, you’ll improve your productivity while cutting superfluous expenses.
According to CDP, orporations that proactively maage climate risks and plan ahead achieve a 18% higher return on investment (ROI) than inactive companies. Moreover, your ROI will be 67% greater compared to firms that you do not disclose their emissions.
A recent survey found that 68% of consumers demand data-backed evidence on companies’ climate action before buying anything from them. And 85% of people ditched businesses rhat did not show any serious commitment to solve the climate crisis.
Overall, these figures show how taking the carbon initiative will boost your triple bottom line.
1. Measure your supply chain emissions
Obvious as it sounds, you cannot reduce emissions if you don’t know how much they are and where they are.
Surveying your suppliers is one of the most straightforward ways to gain precious information on your value chain carbon footprint. According to the Greenhouse Gas Protocol, your standardised survey should question 80% of your suppliers on emission sources and scope, GHG emissions level, any trends, progress towards targets, etc.
Based on the level of detail and functionalities, you can leverage a range of tools as a technical guidance for calculating the Scope 3 GHG emissions of your business.
You begin with, you should use a dedicated tool like Ditch Carbon to have a rough estimate of your carbon emissions. By pulling information from multiple sources (e.g. company, industry, and government reports, business’ finance data, life cycle assessments (LCAs), scientific literature, etc.), our AI algorithm calculates your Scope 3 GHG emissions. In addition, you’ll get a breakdown of your suppliers, including top emitters. Our model will also provide suggestions and insights on how to prioritise and reduce your supply chain carbon footprint. Following any input changes, Ditch Carbon’s software will automatically refine its SECR compliant estimates.
2. Focus on an optimised carbon KPI
Once you have a better idea of what your company is emitting, you should publicly disclose your emissions and keep track of it.
Whilst sales and customer growth are essential to monitor your financial progress, a GHG reduction target should be the highest priority among your key performance indicators (KPIs). You should define which metrics are more suitable for your business. C02 per £ of revenue or perhaps per customer? Making these central to your monthly or quarterly reviews is how you’ll make real change.
In addition, if your Scope 3 emissions make up more than 40% of your total carbon footprint, you could and should set a science-based target. As already done by 2,000 companies worldwide, joining the science-based targets initiative (SBTi) will let you define Paris-aligned goals. You could also set a supplier engagement target.
3. Filter and engage your suppliers
After working on your in-house strategies, you should perform some due diligence on your suppliers. This is crucial as the purchase of goods and services is the predominant category of business Scope 3 emissions.
When selecting new suppliers, you want to go for those who fully disclose their Scope 3 GHG emissions.
Also, you can add other criteria to your filter by looking at their delivery standards:
- Low carbon packaging (e.g. bioplastic instead of plastic)
- Transport mode for shipping (e.g. train rather than truck)
- Climate-friendly fuel (e.g. electric fleet rather than diesal/petrol)
- Optimised logistics (e.g. lower distances travelled, higher loading rate of the carrier)
- Travel emissions compensation
Obviously, you should keep in mind the above factors for your downstream transportation and distribution network as well.
With respect to engaging your existing suppliers, you want to focus on tier 1. If one of them is not disclosing their carbon footprint and you cannot find a compliant and low-carbon alternative, you should encourage them to be more transparent. The more companies put pressure on a supplier, the more likely it will act.
To get you going, here’s an example of the messages sent from our software:
Hi [supplier name],
We’ve started working with Ditch Carbon to help us measure and reduce our carbon footprint.
They have calculated that we have jointly emitted 0152.13 kgs of carbon.
We’d like to work together to see how you can reduce (not just offset) these emissions. Can you let us know if you have any plans in place already to reduce your emissions? If you don’t have any, please let me know when they will be forthcoming as we are keen to do our bit to fight climate change.
I’ve cc’d Ditch Carbon in this email so they can answer any questions you may have on the calculations.
4. Engage your customers
While you have a greatre influence on your upstream emissions, you can also bite into your downstream carbon sources.
If you’re a B2B business, you can push a company to set science-based targets and disclose their emissions based on the aforementioned logic.
Otherwise, by combining eco-design and nudge marketing, you can educate your clients and inspire them to buy low-carbon products and services. Simple actions like collecting parcels at local fufillment centres or offsetting order emissions can change consumers’ behaviour.
Interacting with customers can have knock-on effects on other emission types, such as food consuption, mobility, or recycling.
5. Invest in carbon reduction projects
The four strategies so far will drive down your impact but will not be enough to zero your Scope 3 emissions. Yet, you can fund some carbon reduction projects to compensate for any residual footprint.
Although still relatively expensive, direct carbon removal is by far the most effective GHG reduction strategy as it actively takes C02 out of the atmosphere. Carbon Engineering and Climeworks are currently the most ready-to-capture technologies available.
Another option would be carbon insetting. The concept is similar to offsetting, which should be your last resort, except that you invest in carbon reduction projects within your value chain. In other words, it’s a far more cost-effective method of decreasing your Scope 3 emissions.
As you can see, there’s a lot you can do for cutting down your Scope 3 emissions.
Once you adopt these 5 strategies, the decarbonisation of your supply chain will be within reach.
The tools are out there and time is running out. It’s up to you to make the first step as soon as possible.