How Can Businesses Reduce their Scope 3 Emissions

The latest IPCC report issued a “code red” for system-wide action to urgently and rapidly reduce GHG emissions to avoid disastrous and irreversible climate conditions.

The report says we will reach 3.2°C of warming from pre-industrial levels by 2100. Still, it concludes that nations could cap warming to 2°C by transitioning to clean energy and a green economy that could cut down 25% of global emissions by 2030.

Businesses are crucial in limiting warming to 2°C or even 1.5°C limits. However, it must now consider the climate risks and impacts throughout its operations, including its supply chains. Emissions from supply chains are around 11 times higher than the businesses’ operational emissions, which shows that reducing this area can significantly achieve warming limits (The science is clear, 2021).

Scope 3 emissions refer to all indirect carbon emissions in an organisation’s value chain. While Scope 1 and 2 emissions are those directly emitted by the business’s operations, Scope 3 is outside, both upstream and downstream. Scope 3 makes up the lion’s share of most companies’ total emissions. Many UK organisations report 80% of their total emissions fall under Scope 3, and some as much as 97% (Edie Explains, 2020).

Reducing Scope 3 emissions is vital for a business’s net-zero transition and can help fight climate change. But how can companies accurately measure, report, and reduce their Scope 3 emissions?

Edie’s webinar on 23 September 2021 provided information on how your business or organisation can reach its net-zero carbon targets. Speakers shared tips on how your organisation can slash Scope 3 emissions, which covers gathering and analysing your organisation’s Scope 3 data to engaging key stakeholders and suppliers in ways that can support your business’s net-zero carbon targets.

To watch the webinar, click the link below:

60-minute masterclass: Tackling your Scope 3 emissions on the road to net-zero

The following are key takeaways from the seminar. It should inspire and inform businesses of all sectors and sizes to urgently act on their Scope 3 emissions, whether they are just contemplating or starting their journey to a net-zero emission.

1. Understand how to build the business case for reducing Scope 3 emissions. Reducing Scope 3 emissions addresses both environmental and economic risks. Scope 3 emissions are being included in upcoming regulatory and disclosure requirements, so businesses should start paying attention to them.
2. Read the Greenhouse Gas Protocol. Businesses should read multiple guidelines and standards to map their Scope 3 emissions. Protocols cover Downstream emissions that cover: investments; franchises; leased assets; transport, logistics, distribution; use of products; and end-of-life treatment of products. Upstream emissions protocols include purchased goods and services; capital goods, fuel and energy; transport, logistics, distribution; business travel; employee commuting; waste from operations; and leased assets. Not all categories are relevant to your business, which may depend on what sector you’re in.
3. Establish a data hierarchy. Businesses should have high-quality data from suppliers and actors along the value chain, which is vital to measuring their emissions. The webinar recommends that companies use spend-based analysis of emissions “hotspots” to ensure that data collection and related engagement are meaningfully targeted in the first place.
4. Understand that supplier engagement is not a one-size-fits-all activity. Grouping suppliers by spend, emissions, and business models is likely to improve engagement, as solutions can be better targeted.
5. Consider investing in digital data management tools. Businesses will need to be able to accurately track their data on a regular basis, monitor how they engage with suppliers, measure engagement impacts, use data insights to identify decarbonisation opportunities, and confidently report to key stakeholders.
6. Remain flexible with accounting and disclosure approaches. Although the UK has not yet made the reporting of Scope 3 emissions mandatory, it strongly encourages this disclosure under Streamlined Energy and Carbon Reporting (SECR). While GHG accounting is in its early stages, pressures for businesses to adopt it will likely grow, with increasing pressures from green groups to standardise emissions disclosure, which can soon make GHG accounting mandatory.