How Can Businesses Reduce their Scope 3 Emissions

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

The report says that we are on track to reach 3.2°C of warming by 2100 from pre-industrial levels. Still, then it also 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 play a crucial role to limit warming to 2°C or even 1.5°C limits. But it must act now and consider the climate risks and impacts throughout their operations, including their 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 the indirect carbon emissions which occur 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. For most companies, Scope 3 makes up the lion’s share of their total emission. Many UK organisations report 80% falls under Scope 3 and some as much as 97% of their total emissions (Edie Explains, 2020).

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

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

1. Understand how to build the business case for reducing Scope 3 emissions. Reducing Scope 3 emissions not only address both environmental and economic risks. Scope 3 emissions is being included in upcoming regulatory and disclosure requirements, so businesses should start paying attention to it.
2. Read the Greenhouse Gas Protocol. Businesses should read multiple guidelines and standards to guide them 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; 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 is vital to measure their emissions. The webinar recommends that businesses use spend-based analysis of emissions “hotspots” to ensure that data collection and related engagement is meaningfully targeted in the first instance.
4. Understand that supplier engagement is not a one-size-fits-all activity. This includes grouping suppliers in terms of spend, emissions, and business models, which 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 are engaging with suppliers; measure engagement impacts; use data insights to identify decarbonisation opportunities, and accurately report to key stakeholders with confidence.
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 take it up will likely grow with increasing pressures from the green groups to standardise emissions disclosure which can soon make GHG accounting mandatory.