Top 5 Questions AI can answer for Scope 3 Decarbonization
Artificial intelligence (AI) has emerged as a powerful tool in addressing complex challenges. Specifically, its potential for tackling climate change has gained significant attention. Today, effective climate actions require us to collect and interpret vast amounts of data on emissions, climate risks, and more. Not only from one’s own company, but also along whole value chains. This is because most of a company’s emissions – even up to 90% – occur in Scope 3. A transparent data basis is therefore needed on which to effectively collaborate with suppliers on joint decarbonization measures.
This is where AI plays a crucial role. According to a survey by Boston Consulting Group, 87% of 1,000 executives consider AI a helpful catalyst for climate transformation. Through the use of AI, companies can now quickly access data from public sources about their suppliers on a large scale, allowing them to better collaborate with them on decarbonization efforts. On top of that, they can gain essential strategic insights about the climate maturity of their business partners and competitors. In this article, we explore the top five questions that AI can answer for Scope 3 decarbonization, empowering you to make informed and impactful climate decisions.
1. Has the company calculated Scope 1, 2, and 3 emissions?
When assessing the climate maturity of your supply chain, one of the fundamental questions in evaluating a company’s commitment to decarbonization is the extent to which they have calculated and disclosed their greenhouse gas (GHG) emissions. AI can help assess whether a company has comprehensive coverage of Scope 1, 2, and 3 emissions. By analyzing public data, AI algorithms can identify relevant information from your supplier’s sustainability reports, public statements, and other disclosures. This allows you to assess your own emissions in more detail and compare them with industry benchmarks along your supply chain, setting a foundation for meaningful decarbonization strategies.
2. Has the company set climate targets?
Setting ambitious climate targets is crucial to driving action and holding companies accountable for their emission reduction efforts. The next important question is therefore to what extent a supplier has set and communicated climate targets and ambitions. To get answers, AI algorithms can extract and aggregate information from public announcements, reports, and social media activity regarding a company’s specific emissions reduction goals. This knowledge enables you to benchmark your company’s own targets against industry peers and business partners in order to identify areas for improvement.
3. Has the company a climate transition plan in place?
To achieve your own climate targets, you need a transition plan that outlines how your company navigates the complex process of decarbonization. And so do your suppliers need such a roadmap to implement reduction measures. AI can help determine whether a supplier has a transition plan in place by analyzing public disclosures and sustainability reports. This allows you to gaining insights into the decarbonization strategies, initiatives, investments and businesses activities of your business partners as well as competitors. Doing so, you can identify potential synergies or areas for collaboration.
4. Is the company engaging their suppliers for climate action?
As seen above, your suppliers play a pivotal role in your Scope 3 strategy and significantly impact your decarbonization journey. Therefore it is crucial to know if a supplier is actively engaging and monitoring its own supply chain with regards to emission reduction. Public supplier reports, sustainability initiatives, and collaboration programs convey the extent of a company’s engagement with its suppliers. This information allows you to assess the effectiveness of your own existing supplier management and identify opportunities to collaborate on decarbonization measures with peers.
5. Has the company communicated concrete decarbonization measures?
Last but not least, communicating concrete decarbonization measures is essential to demonstrate commitment, become accountable and inspire others to follow suit. Leveraging AI’s capabilities, you can assess whether your own organization as well as suppliers have effectively communicated its decarbonization initiatives – and which one in particular. This analysis allows you to gain insights into industry-wide actions, identify leading best practices and improve your own impact.
Conclusion
AI offers a powerful tool for companies seeking to enhance their decarbonization in Scope 3 by leveraging climate-relevant information on a large scale. Employing AI algorithms empowers decision makers to answer critical questions related to emissions data, climate targets, transition plans, supplier engagement and decarbonization measures. This way, businesses gain valuable insights into their own operations and those of their stakeholders. Equipped with this knowledge, organizations can collaborate more effectively with suppliers, benchmark their progress against industry peers and strategically position themselves to drive meaningful change. Through the power of AI, companies can take significant steps towards Scope 3 decarbonization and contributing to a sustainable future.