Mastering Scope 3 Targets - How to get it right?!

Practical Insights from ChoiceEvent #77

At ChoiceEvent #77, co-hosted by ClimateChoice and Dr. Susanne Köhler from myclimate, we tackled the challenges companies face in setting, tracking, and achieving Scope 3 emissions targets. This online event also provided a sneak peek into our ongoing Scope 3 Action Group, designed to help businesses navigate the complexities of Scope 3, often the largest share of a company’s carbon footprint. With standards like SBTi (Science Based Targets initiative) evolving and supply chain transparency lacking, many struggle with implementation.

Dr. Köhler, an expert in decarbonization and life cycle assessments, shared practical strategies for setting impactful Scope 3 targets and emphasized the importance of collaboration across the supply chain. Below are key takeaways to help your company make meaningful progress toward Scope 3 decarbonization.

Why Scope 3 Reduction Targets Matter

Scope 3 emissions, which include all indirect emissions in a company’s value chain (e.g., raw material extraction, product transportation, end-of-life disposal), can account for over 70% of a company's total carbon footprint, especially in manufacturing and retail sectors.

Dr. Köhler highlighted that science-based targets (SBTs) provide the most credible path to align with global climate goals, tying corporate actions to the Paris Agreement’s 1.5°C target. As of 2022, companies representing 34% of the global economy by market capitalization had committed to SBTs, making it the de facto standard for Scope 3 reductions.

How to Set Science-Based Targets Effectively

ChoiceEvent #77 offered clear guidance on setting effective Scope 3 targets:

1. Set Targets at the Parent Company Level
   Establish climate targets at the parent company level to ensure consistency and accountability across the entire organization.

2. Customize Targets by Industry
   Different sectors face unique decarbonization challenges. SBTi’s sector-specific guidelines help companies follow best practices tailored to their industry, such as more rigorous requirements for financial institutions and oil & gas.

3. Simplified Process for SMEs
   SBTi offers a simplified verification process for small and medium-sized enterprises (SMEs), encouraging their participation in decarbonization efforts. However, certain sectors, like oil & gas, are excluded from this simplification due to their high environmental impact.

4. Prioritize Direct Emissions Reductions Over Offsetting
   While carbon credits can play a voluntary role, the focus must remain on direct emissions reductions—such as improving energy efficiency and adopting renewable energy. Offsets should be a last resort, especially given the controversy around SBTi's April 2024 announcement allowing offsets for Scope 3 emissions, which faced criticism for potentially encouraging greenwashing.

The SBTi and Carbon Offsetting Debate

SBTi’s April 2024 announcement allowing carbon credits for Scope 3 emissions sparked backlash from climate experts, who argued it might encourage companies to rely on offsets rather than genuine reductions. Critics raised concerns about greenwashing, with some fearing that offsetting could dilute real decarbonization efforts. This controversy led to the resignation of SBTi’s CEO and a commitment to reviewing the role of offsets in future standards.

Scope 3 Decarbonization: A Strategic Imperative

Committing to Scope 3 targets isn’t just about regulatory compliance—it’s a business imperative. Investors, customers, and regulators are increasingly demanding transparency and progress on sustainability. Companies that proactively address Scope 3 emissions can enhance their competitiveness, gain investor trust, and future-proof their operations.

Collaborating with suppliers is key to achieving significant Scope 3 reductions. During the event, participants discussed the importance of working closely with suppliers to align decarbonization goals, leading to more informed decisions and strategic investments that drive meaningful change.

Final Thoughts: Accelerating Scope 3 Action

As highlighted during ChoiceEvent #77, companies need a proactive, strategic approach to setting and achieving Scope 3 targets. By prioritizing direct emissions reductions, engaging the supply chain, and aligning with science-based standards, businesses can contribute to a sustainable future while enhancing their market position. Now is the time for bold action on Scope 3 emissions to meet climate targets and respond to growing demands for transparency in sustainability practices.

Join the Conversation

Missed ChoiceEvent #77? Don’t worry!

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Join the growing ClimateCommunity of companies committed to meaningful Scope 3 decarbonization in the Scope 3 Action Group starting in March 2025. Learn from industry experts, gain actionable insights, and accelerate your journey toward Scope 3 emissions reductions!