Schneider Electric’s Path to Scope 3 Decarbonization

To meet their climate targets, global corporations must reduce CO2 from their supply chain in particular, which can account for up to 90% of their total emissions. The problem: they cannot reduce these Scope 3 emissions themselves, but instead have to enable their suppliers to do so. This collaboration requires, above all, holistic data on the climate performance of suppliers, which does not yet exist.

How does a global enterprise such as Schneider Electric deal with this challenge? This is what we learned at the the CHOICE Event #47 from Kanishk Negi, Sustainable Procurement Director at Schneider Electric. Here you will find the most important insights from his presentation.

Schneider Electric’s corporate sustainability strategy

Schneider Electric SE, the multinational leader in the digital transformation of energy management and automation, is aiming to accelerate sustainable progress for its customers, employees, partners and communities everywhere. For this purpose, the organization has set six long-term commitments:

To ensure compliance, Schneider Electric has committed to achieving 12 measurable goals by 2025.

Schneider Electric's sustainability strategy

The particular importance of procurement is reflected in the fact that one-third of these targets depend mainly on Schneider Electric’s supply chain (marked with a blue arrow in the graphic). Of these four procurement-dependent commitments, let’s now take a closer look at how Schneider Electric is trying to reduce the CO2 emissions of its top 1,000 suppliers by 50%.

The challenges of Scope 3 decarbonization

Decarbonizing Scope 3, or supply chain emissions, is a complicated and challenging undertaking. This is especially true for a large and diversified company like Schneider Electric. The multinational organization employs more than 128,000 people in 115 different countries. Its procurement spend last year was over 14 billion euros. Because of its well-balanced global presence, Schneider Electric’s suppliers come from all parts of the world. Managing this global supply chain effectively is therefore a particularly complex task.

Supplier distribution Schneider Electric

In addition, when Schneider Electric began looking at the climate maturity of its top 1,000 suppliers, further challenges came to light. As it turned out, 70% of these companies were actually new to the idea of decarbonization. This means that they had never calculated or quantified their carbon footprint and were not aware of the difference between Scope 1, 2 and 3 emissions. Furthermore, two-thirds of the suppliers requested were found to be small and medium-sized enterprises. This added another nuance to the challenge, as smaller companies have only limited capacities and competencies when it comes to topics like sustainability and decarbonization. Accordingly, many suppliers initially took particular notice of the high cost factor involved in implementing climate protection measures.

Solving the problem: The Zero Carbon Project

After gathering all these insights and gaining a holistic understanding of the challenges, Schneider Electric launched a comprehensive support program in April 2021 and named it “The Zero Carbon Project”. Under the program, Schneider provides tools and resources in order to help suppliers set and achieve their climate targets. The suppliers participating in the program were first encouraged to quantify their CO2 emissions using the company’s digital tools. This data was then used to set goals and strategies for emissions reduction. 

In order to provide suppliers with comprehensive support for climate actions, Schneider Electric has established a wide range of offerings. So far, more than 130 live training sessions on CO2 calculation and decarbonization measures took place. In addition, Schneider Electric has provided its suppliers with various digital tools on its web portal. Among other things, they can use these for a digital emissions calculation as well as for best practice exchange with peers and partners to access other innovative solutions for decarbonization. The consultation is supported by specialized experts and is also adapted to the different geographical characteristics.

Supplier Support Framework, Scope 3 Schneider Electric

The results of all these intensive engagements have already been promising. 1,016 active suppliers are currently participating in the program and are being engaged in decarbonization measures. 90% of those suppliers have now calculated their CO2e footprint. In addition, the participating suppliers have already reported around 8% reduction in their CO2e emissions.

Streamlining Scope 3 decarbonization with digital tools

Schneider Electric’s pioneering efforts show that, despite today’s challenges, it is actually possible to successfully engage suppliers in decarbonizing the supply chain. Nevertheless, as it stands today, companies can only accomplish this extremely complex task with a great deal of effort, which is why digital tools are now more crucial than ever in order to streamline the process of collaborating with suppliers. 

Climate Ready Supply Chain

One such tool is our Climate Intelligence Platform. The end-to-end Software as a Service platform helps enterprises to capture and manage comparable climate-related performance data and information from their suppliers. Via the secure IT platform, suppliers can easily report their climate data and obtain benchmarks, year-to-year comparisons as well as action-oriented potential and concrete decarbonization measures. Thereby, suppliers and customers can work together in a transparent manner to actively pursue climate goals.

For more information on the benefits of the Climate Intelligence Platform for Scope 3 decarbonization:

Get basic access for free within 5 minutes by completing our form and climate check.

SMEs are getting Climate Ready – How to succeed in the race to zero!

Small and medium enterprises (SMEs) play a major role in the national economic development in countries worldwide. Globally, they account for about 90% of all companies, 50% of employment and a significant impact on supply chain performances. 

Basic Prizing

Like companies of all sizes, also SMEs are facing several challenges today. Global supply chains struggle, long term planning is difficult and upcoming climate regulations impose new guidelines on businesses. SMEs often lack resources and capabilities to deal with the fast changing circumstances.

Find in the following how the freshly launched Climate Readiness Check supports companies to move towards climate transformation.

SMEs becoming Climate Champions

SMEs play a key role in achieving the 1.5 degree target. Not only as they are key economic players, but also as they are essential to any global supply chain. This is important, as emissions from supply chains are typically 11.4 times higher than direct corporate emissions. Many large companies therefore channel their climate protection requirements along the supply chain to their suppliers, often SMEs. 

This means whole businesses have to transform the way they create value! Every company needs to become a Climate Champion, contributing to a climate compatible and future-oriented economy. Customer inquiries and international climate reporting standards are increasingly demanding effective action. Climate action is thus one of the top priorities for SMEs today.

However, many SMEs still lack the necessary resources to get into the various aspects of climate transformation and to create a concrete roadmap based on this. The question is: How can SMEs manage their climate performance, prepare for climate-related risks and position themselves as reliable leaders for decarbonization within supply chains?

Go beyond Offsetting, manage your Climate Performance

Professional Prizing

It all starts with understanding the actual climate performance of a company. Which goes way beyond measuring CO2 and offsetting it. International disclosure guidelines, such as TCFD, ask companies to assess, manage and report their climate performance holistically. The most essential five dimensions are: governance, strategy, transparency, KPIs & metrics and decarbonisation actions. 

However, collecting the relevant data within a company can be challenging, especially for SMEs. Lacking time, tools and know-how makes it difficult to gather, streamline and manage the needed information. 

Taking first steps towards Net Zero

In the last few years, we have witnessed the need for an easy start into the climate transformation journey. Many companies, especially SMEs, approached us with the questions how to set up priorities, identify most needed actions and start improving over time. 

“For a holistic change towards a sustainable economy, tools are needed that provide SMEs with an initial orientation on how they can transform their business in a climate-compatible way. For this challenge, THE CLIMATE CHOICE has developed a practical solution. The Climate Readiness Check is an accessible tool for SMEs that enables a new push in the strategic pursuit of climate targets in SMEs.”

Phoebe Köster, Climate Policy Manager at Bundesverband Nachhaltige Wirtschaft e.V.

This is why we are happy to release today our digital and free Climate Readiness Check! Which we launch in partnership with 10 leading sustainability organizations, including B.A.U.M. e.V., Bundesverband Nachhaltige Wirtschaft e.V. (BNW), Fairantwortung e.V., Foundation Development and Climate Alliance, Jaro Institute for Sustainability and Digitalization e.V., the German Association for Small and Medium-sized Enterprises (DMB) and Zentrum für Nachhaltige Unternehmensführung (ZNU).

“Climate friendliness is increasingly becoming a competitive advantage for small and medium-sized enterprises (SMEs). On the way to climate-neutral operation, the Climate Readiness Check is a useful and low-threshold aid.”

Steffen Kawohl, Transition Manager at Deutscher Mittelstands-Bund e.V.

The Climate Readiness Check offers companies of all sizes an easy entry point into their climate transformation: through insights into their own climate maturity, suggestions for improvement and a basic access to the climate intelligence platform.

Get started with your free 5-minute Climate Readiness Check

The free Climate Readiness Check helps to overcome the initial barriers of Climate Transformation and to take the first step towards climate action. The software-driven climate self-test is manageable in 5 minutes and guides through the most relevant indicators of a company’s climate maturity.

Here is how the Climate Readiness Check empowers companies.

1. Be ahead of Climate Regulation

Completing the Climate Readiness Check will grant insights, which help companies taking first steps towards climate disclosure requirements.

2. Discover Quick Wins

Assessing the climate maturity of a company, the Climate Readiness Check proposes relevant areas for improvement and suggests immediate actions.

3. Access to Climate Platform

Successfully completing the Climate Readiness Check grants access to the Climate Intelligence Platform, where companies can discover like-minded businesses.

Climate Ready, Steady, Go!

“Climate Transformation is a goal we can only achieve together. Our free Climate Readiness Check gives first insights on a company’s individual climate maturity and allows access to the Climate Intelligence Platform, where companies can connect with other companies on their path to zero. We are excited to support businesses of all sizes to take first steps towards a low-carbon economy together.”

Lara Obst, Founder & Climate Officer at THE CLIMATE CHOICE.

You want to start your free Climate Readiness Check? Congrats, start now your climate transformation journey here!

New proposals for climate-related disclosure standards by ISSB – This is what you need to know 

International investors increasingly demand information on environmental, social and governmental (ESG) matters. Transparency around sustainability and climate-related affairs gains relevance today more than ever. According to the IFRS (International Financial Reporting Standards) Foundation, the current regulations do not ensure that climate-relevant information is disclosed to a reasonable extent, but still encourages an inconsistent and selective application of voluntary standards. 

ISSB

In November 2021 at COP26 in Glasgow, the formation of the International Sustainability Standards Board (ISSB) was announced. The ISSB is an independent private-sector body that operates under the oversight of the IFRS Foundation. Its aim is to develop a globally applicable and comprehensive set of sustainability disclosure standards that works for major economies as well as for emerging markets. 

Therefore, the ISSB has proposed two new standards, in order to create further consistency, comparability and reliability across climate disclosure. The standards require companies to reveal relevant information about its significant sustainability-related risks and opportunities, necessary for investors to assess a company’s enterprise value. The G7 welcomes the establishment of the International Sustainability Standards Board and calls on all relevant stakeholders to participate in the ongoing consultation on the proposed standards. In order to create a practical, flexible and proportionate disclosure baseline, that is ultimately suitable for small- and medium-size enterprises, the G7 invites other reporting initiatives to cooperate in the process of elaborating the baseline.

Based on the work of existing investor-focused reporting initiatives – including the Climate Disclosure Standards Board, the Task Force on Climate Related Financial Disclosures (TCFD) and the World Economic Forum´s Stakeholder Capitalism Metrics – the ISSB is working towards the incorporation of the global baseline into legal requirements, with the aim to become the global standards-setter for sustainability disclosure for the financial markets. 

Both of the new standards are mainly built upon the recommendations of TCFD. While one of the proposals sets out general sustainability-related disclosure requirements, the other specifies on climate-related disclosure. Learn more about the climate-related disclosure requirements in the following.

What is the goal of the ISSB Climate-related Disclosure Standards?

The objective of „IFRS S2 Climate-related Disclosures“ is to require a company to disclose information about its exposure to significant climate-related risks and opportunities. This enables investors to access relevant information in order to make climate-compatible and sustainable financial decisions. The goal is to assess the effects of significant climate-related risks and opportunities and to understand how a company’s use of resources and activities support managing its risks as well as to evaluate the options to adapt planning, business model and operations to significant climate-related risks and opportunities. Companies are required to disclose information along the dimensions Governance, Strategy, Risk Management and Metrics & Targets. Find more detailed information on the disclosure regulations along those dimensions in the following section.

1. GOVERNANCE

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2. STRATEGY

3. RISK MANAGEMENT

4. METRICS & TARGETS

How do companies prepare for the ISSB requirements? 

Since enterprises will be required to disclose climate-related information along these four dimensions, they will face the challenge to collect climate-relevant data and analyze their climate performance. How do companies prepare for that?

Today, many companies are already using data-driven software tools, which helps them to analyze their climate performance holistically. The Climate Performance Assessment offers a fast and structured data analysis aligned with internationally recognized standards. It enables companies to holistically analyze their climate performance along the four dimensions Governance, Strategy, Metrics & Targets and Transparency. The Climate Performance Assessment is fit to meet the ISSB’s climate-related disclosure requirements as it covers the key disclosure information. 

You want to know more? Download our new Whitepaper to find more details on the upcoming ISSB standards and how to prepare for them here.

Image: Unsplash

Prioritizing Climate Transparency in the Technology sector

Karli Cumber

Interview partner: Karli Cumber is responsible for any marketing, social media communications, and sustainability related activates for Footprint Technologies. The Berlin start-up develops an AI based technology that enables users to always find the perfect fit for selected apparel during online shopping. In this way, Footprint Technologies provides online retailers with a solution to reduce the high number of returned products, and thus saving CO2 and costs.

In an interview with THE CLIMATE CHOICE, Karli shares Footprint Techologies’ challenges and progress in implementing their own climate transformation and how the Climate Readiness Check has helped them.

Can you briefly introduce yourselves to our CLIMATE Community?

At Footprint, our greatest climate goal is to reduce the amount of CO2 emissions related to returns and reshipments in the footwear industry. Our challenge is to reduce negative environmental effects caused by the processes of shoe returns, specifically due to improper fit. We have started in the children’s shoe segment and this year we are starting to make our way into the adult shoe segmentation. Our services offer a foot measurement technology, which is intended to find the correct-size fitting shoe based on the exact dimension of the shoes’ manufacturing. In 2021, we published our first ‘Sustainability Report’ for the company, where we discussed our climate commitments and partnerships such as with The Climate Choice, as well as reevaluate our current practices. This includes our internal climate code of conduct, to best support our overall climate mission.

What are the biggest climate-related challenges you face in your daily lives?

As we are mostly working digitally, also remotely, we don’t necessary encounter too many climate related challenges on a daily basis, such as transport or paper printing/usage. But because we are a green-minded company, in our Sustainability Report we summarize the day-to-day activities which support our climate mission. Some of these include our energy consumption of our software, mobility, team learning, and event participation. Overall, we make it a priority to choose more environmentally friendly options when available, and create a welcoming space for learning and open dialogue within our team. Additionally, we provide opportunities and encourage the team to learn about sustainable options, for them to pursue a sustainable lifestyle outside of work.

Together we carried out the Climate Readiness Check. What was your motivation?

Our motivation to conduct the Climate Readiness Check was to get insights on where our company currently stands at with our climate efforts and to increase our score as a company.

What were the most important lessons you learned?

From the results of our Climate Readiness Check, we learned that we are extremely transparent when it comes to our climate efforts. While this factor may seem obvious for a company that specializes in technical solutions, we find that our transparency is something that can serve as a model throughout our industry. Other than that, we also took note of the areas for improvement as we continue to look forward. We have learned, there are many different areas that are necessary to be considered during a Climate-Scoring.

What are the best practices that you would like to pass on to other organizations?

We would encourage other organizations to prioritize transparency and enable positive climate thinking. We recognize that it is important to consider the environment in our work solutions and moreover to implement this commitment as an integral part of our values. We want to drive forward change in our industry and encourage future partners or collaborators to think the same way. As technology has the favorable quality of constantly being ready to adapt, also our climate actions should be adaptable.

You want to know more about the Climate Readiness Check? Do not hesitate if you want to learn how our software service is enabling you to take the next steps forward. Contact us for more information