Addressing the invisible: Tackling Scope 3 emissions in your value chain

In this series, we will explore the challenging world of Scope 3 emissions - the indirect emissions that exist within any organisation's value chain, from production to disposal. Although Scope 3 emissions significantly contribute to an organisation's carbon footprint, they can be difficult to measure and manage. This series aims to provide you with the necessary insights to understand and address these challenges.

Join us as we delve into the complexities, explore industrial practices, standards, and recommendations for addressing Scope 3 emissions.

Greenhouse gas (GHG) emissions represent a significant global concern, with sources including the burning of fossil fuels, industrial processes, and transportation. The United Nations Framework Convention on Climate Change (UNFCCC) has been established to tackle this issue, with the Conference of the Parties (COP) series being a key platform. COP28, the upcoming conference, will focus on reducing GHG emissions and adapting to the effects of climate change. However, understanding and measuring emissions remain a challenge.

The GHG Protocol categorises emissions into three "scopes": Scope 1 refers to direct emissions from sources that organisations own or control, while Scope 2 includes indirect emissions from purchased electricity, heat, or steam. Scope 3 emissions encompass all other indirect emissions from a company's value chain, including the extraction and production of purchased materials and fuels, transportation-related activities, and waste disposal.

The Carbon Trust estimates that Scope 3 emissions can account for up to 90% of a company's total emissions. Despite accounting for the majority of a company's total GHG emissions, Scope 3 emissions are often overlooked in traditional reporting. This lack of attention presents a problem as it hinders the ability to set meaningful reduction targets and develop effective strategies. Reporting Scope 3 emissions can enhance transparency and accountability, identifying opportunities for companies to address emissions in their value chain. However, data availability, complexity, lack of standardisation, limited control, and cost are key challenges in reporting Scope 3 emissions.

As stakeholders demand greater accountability and transparency for the environmental impact of organisations and their products, companies are being held responsible for reducing their own emissions as well as those produced by their supply chain. To achieve sustainability, it is crucial for companies to recognise that reducing emissions across their entire value chain is their responsibility.

To ensure the success of COP28, not only governments but also businesses and individuals have a responsibility. Businesses have a crucial role in reducing their Scope 3 emissions, and measuring and reporting these emissions is vital to understanding and addressing their total emissions. This approach can increase transparency and accountability while also offering opportunities for companies.

The combination of advanced analytics, AI, and a track, trace, and optimise approach can help organisations with measurement, verification, and reporting (MRV) of carbon emissions, as well as with decarbonisation and efficiency efforts. Advanced analytics and AI can analyse data to identify patterns and inefficiencies, while a track, trace, and optimise approach can track energy use and emissions across the supply chain to optimise processes. Together, these tools can help organisations accurately measure and report progress towards decarbonisation goals. Additionally, they can provide insights into the environmental impact of a company's products and operations along with added benefits such as:

1. Increased transparency: Companies can build trust with stakeholders such as customers and investors by tracking and reporting on emissions, which helps to increase transparency on the environmental impact of their products and supply chain.

2. Improved efficiency: By tracing the emissions associated with different stages of a product's lifecycle, companies can identify areas where they can improve efficiency and reduce emissions. For instance, sourcing materials from a closer supplier can reduce emissions associated with transportation.

3. Risk management: Tracking and tracing emissions can help companies to identify and manage risks associated with their products and supply chain. For example, a company might switch to a more sustainable supplier if it finds that a supplier is using a process that results in high emissions.

4. Cost savings: Optimising emissions can lead to cost savings by reducing energy consumption and waste.

5. Compliance: Many countries and regions require companies to report on their greenhouse gas emissions, including Scope 3 emissions. Tracking, tracing, and optimising emissions can help companies comply with these regulations.

6. Competitive advantage: Companies that show leadership in reducing their emissions can differentiate themselves from their peers and attract environmentally conscious customers, giving them a competitive advantage.

Similar initiatives can not only help companies build trust with stakeholders but also identify areas for improvement. Companies can also reduce their Scope 3 emissions by collaborating with partners in their value chain to set targets and develop sustainable procurement policies. Governments can further support emissions reduction efforts by funding research and development of new solutions, implementing policies that incentivise companies to reduce emissions, and increasing transparency in emissions reporting.

Ultimately, reducing emissions requires cooperation and commitment from businesses, governments, and individuals. It is everyone's responsibility to act now with urgency, passion, and commitment towards a sustainable future. In summary, the success of COP28 depends not only on governments but also on the involvement of businesses and individuals.

We hope this introduction to 'Scope 3 in Focus' has been informative and insightful. Stay tuned for the upcoming episodes in this series, where we'll dive deeper into the challenges and discuss industrial case studies and existing solutions for tackling Scope 3 emissions.