2024-08-12
Decarbonization
The Holy Grail of Walking the Climate Talk: Scope 3 & CO2 Data from Suppliers
To truly achieve corporate climate targets, companies must activate and engage their suppliers, as the supply chain can account for up to 90% of emissions (Scope 3). The first step is to clearly understand the supplier structure and pre-qualify suppliers for decarbonization based on climate-relevant data. In a next step, the in depth supplier climate performance can be assessed to create a Scope 3 strategy that supports suppliers accordingly. What is the best way to make this happen?
Understanding the Significance of Scope 3 Decarbonization
In its 2020 Global Supply Chain Report, CDP famously found that greenhouse gas (GHG) emissions from a company’s supply chain are on average 11.4 times larger than GHG emissions from its operations.
Some companies misinterpreted this ratio, prioritizing endless Scope 3 calculation, over reduction efforts. However, while prioritizing buying products and services with the lowest carbon footprints makes sense, one must focus on getting one step down after the other. Ironically, "perfect carbon calculations" risk becoming a decelerator rather than an accelerator of reducing GHG emissions in supply chais.
Complete Carbon Footprints: Difficult to Figure Out
Why is that? Measuring carbon footprints can be challenging because the bulk of emissions often occur far up- or downstream in the supply chain. Most companies find that only a small percentage of the footprint comes from their own operations, while the majority comes from suppliers - and their suppliers. Thus, calculating carbon footprints without quality data from the supply chain is difficult.
Understanding the Scope 3 Challenge: GHG Protocol Methodologies
The GHG Protocol’s “Technical Guidance for Calculating Scope 3 Emissions” provides four ways to calculate corporate carbon footprints:
Spend-based method: Uses industry average emission factors per dollar spent.
Average-data method: Uses industry average emission factors per unit of mass.
Hybrid method: Combines supplier-specific data with secondary estimated industry average emissions factors.
The holy grail - Supplier-specific method: Uses GHG inventory data from suppliers throughout the supply chain. This is the holy grail but requires difficult-to-access data from specific suppliers.
Some buyers are already partnering with suppliers to gather precise data, provide supplier-friendly support, and gain high quality emission data as a result, but this takes time and resources.
Action-Ready Buyer Road Map towards Scope 3 Data
However, this journey from spend-based data to supplier-specific data can be long lasting and difficult. Most buyers therefore search for easy, scalable and nevertheless high-quality support.
𝐑𝐨𝐚𝐝𝐦𝐚𝐩 𝐭𝐨 𝐬𝐭𝐫𝐞𝐚𝐦𝐥𝐢𝐧𝐞 𝐲𝐨𝐮𝐫 𝐒𝐜𝐨𝐩𝐞 𝟑 𝐉𝐨𝐮𝐫𝐧𝐞𝐲 𝐢𝐧 𝟓 𝐒𝐭𝐞𝐩𝐬
✅ 1. 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿 𝗦𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲. Gain transparency by accurately screening your supply chain (using AI or SHORT & SIMPLE supplier surveys).✅ 2. 𝗣𝗿𝗲-𝗤𝘂𝗮𝗹𝗶𝗳𝘆 𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿𝘀. Set criteria based on the identified supplier climate maturity, like providing carbon footprint data, climate targets and actual actions.✅ 3. 𝗘𝘃𝗮𝗹𝘂𝗮𝘁𝗲 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲. Assess supplier's holistic climate performance in a second step on more detailed insights - regarding their climate governance, decarbonization strategy, data transparency, CO2 metrics, and reduction efforts.✅ 4. 𝗖𝗹𝗮𝘀𝘀𝗶𝗳𝘆 𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿𝘀. Develop strategies to boost each category in order to increase the overall climate performance of your supply chain, offering tailored support for each group.✅ 5. 𝗖𝗿𝗲𝗮𝘁𝗲 𝗗𝗲𝘃𝗲𝗹𝗼𝗽𝗺𝗲𝗻𝘁 𝗣𝗹𝗮𝗻𝘀. Translate data & evaluations into concrete action plans. This pays out directly in your own Transition Plan, and allows you to track progress towards your Net Zero Scope 3 Targets.
These 5 steps allows you to easily understand the climate maturity of your suppliers, using digital tools like the AI-driven Climate Intelligence Platform, award suppliers for providing up-to-date emission data and integrate supplier climate scorecards into existing procurement processes to accelerate net zero Scope 3 strategies.
Summary: Why Focus on Scope 3?
🔑 𝗪𝗶𝘁𝗵 𝗦𝗰𝗼𝗽𝗲 𝟯 𝗲𝗺𝗶𝘀𝘀𝗶𝗼𝗻𝘀 𝗮𝘃𝗲𝗿𝗮𝗴𝗶𝗻𝗴 𝟭𝟭.𝟰 𝘁𝗶𝗺𝗲𝘀 𝗵𝗶𝗴𝗵𝗲𝗿 than direct emissions, setting specific targets is crucial. Despite challenges like lack of data and tools, companies must integrate climate considerations into procurement processes.🔑 𝗔𝘂𝘁𝗼𝗺𝗮𝘁𝗲 & 𝗖𝗼𝗹𝗹𝗮𝗯𝗼𝗿𝗮𝘁𝗲Utilizing digital tools like the Climate Intelligence Platform support you in automating supplier data collection as well as in effectively collaborating with suppliers.
Supplier Support: Getting Started with Carbon Accounting
As shown, gathering high quality data from your suppliers is key to improve your Scope 3 Calculation, but should especially be used as first process step to increase the Climate Maturity of your suppliers. Most important: Accelerate the resources and skills of your suppliers, and support them in assessing their own carbon footprint.
Supplier Guide including 8 Free Carbon Accounting Tools
This free resource offers the technical background and a list of free carbon accounting tools tailored to suppliers. Use the tools for your own business or to support your suppliers on their climate journey.
This Guide Offers:
Overview to start with Carbon Accounting
Explanation on Key Concepts & Methodologies
A catalogue & analysis of 8 free-of-charge carbon accounting tools
Sector-specific tools for carbon accounting for packaging & print products, farming / agriculture products as well as logistics emissions.
Take action today by downloading the Whitepaper: Getting Started with Carbon Accounting
Before being perfect, get started!
Complete Scope 3 Calculations, that include high quality data from suppliers, are crucial for understanding emissions and tracking reduction efforts along the supply chain. However, having perfect data was never the goal in first place - but the acceleration of reduction efforts!
Focus on increasing Climate Maturity
Calculation measures must be embedded in holistic Net-Zero Procurement Processes that support collaboration with suppliers. Data acquisition can this way be the starting point for a long lasting journey towards joined emission reduction. Using the data to track, request and accelerate the implementation of climate action is key. Let’s not get sidetracked in a carbon-footprintting-paralysis. Let's instead focus on increasing the climate maturity of suppliers to reduce emissions.
Make Scope 3 Action your Business: Join Climate Transformation Summit, 12th Sep. Apply now!
