5 top tips for tackling your organisation’s Scope 3 emissions on the road to net-zero

Most organisations will find that a majority of their total emissions footprint sits within the Scope 3 (indirect) category, making this area a key focus for the transition to net-zero. But how challenges measuring, reporting on and reducing emissions across the value chain be overcome?

These were the questions which edie sought to answer during its latest masterclass webinar, which was hosted on 1 September in association with Carbon Intelligence.

The 60-minute session was held in recognition of the fact that most businesses believe that at least 80% of their total emissions footprint falls within Scope 3. Indeed, CDP has calculated that the average company’s supply chain emissions are around five-and-a-half times greater than those generated by their direct operations. This means that the global economy is unlikely to become a net-zero emissions system by 2050, the deadline recommended by the IPCC, without ambitious and holistic action to tackle Scope 3 emissions.

During the masterclass webinar, which is now available to watch on-demand, experts from the Carbon Intelligence and Pukka Herbs – the first tea brand to have set 1.5C science-based targets – gave their best-practice advice on doing just that.

Here, edie rounds up five of the speakers’ key takeaways, which should serve to inform and inspire businesses of all sizes and sectors, regardless of where they are on their journey to address Scope 3 emissions in line with climate science.

1) Read the GHG Protocol

As has been said many times before: You cannot manage what you cannot measure. There are multiple guidelines and standards which businesses can follow to map their Scope 3 emissions, but Carbon Intelligence’s associate director Danielle Mulder cited the GHG Protocol as an “essential read” for anyone who is either just getting started on the mapping journey or is seeking to improve accounting processes.

The Protocol is overseen by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). It covers both upstream and downstream emissions and is used by the vast majority of large businesses disclosing to CDP, making it widely recognised.

Downstream sources of emissions covered by the Protocol are:

• Investments
• Franchises
• Leased assets
• Transport, logistics, distribution
• Processing of sold products
• Use of products
• End-of-life treatment for products

Upstream sources of emissions covered by the Protocol are:

• Purchased goods and services
• Capital goods
• Fuel and energy
• Transport, logistics, distribution
• Business travel
• Employee commuting
• Waste from operations
• Leased assets

Which sources are the most material for a business will depend on its size, sector and the geographical markets it operates within. It is important to allocate resources appropriately.

2) Data is king

While most companies are capturing data around their Scope 1 (direct) and Scope 2 (power-related) emissions, getting accurate figures for Scope 3 emissions is more challenging – particularly for organisations with multinational, multi-tier or otherwise complex value chains. But it is also essential for businesses to rise to the scale of the climate emergency and to comply with ever-more-stringent emissions reporting requirements, such as TCFD-aligned disclosure or frameworks like Streamlined Energy and Carbon Reporting.

Mulder acknowledged that the most accurate method of accounting is to use solely supplier-specific data about the life-cycle of products, but that most companies are not yet at this stage and should set targets and undertake new actions before completing this exercise. She urged businesses to think of the process of improving data as “looking into a camera” – the picture may seem blurry at first, but with the right adjustments, it will come into sharp focus.

Companies looking to go beyond basing calculations on spend should calculate their material weights/volumes and use industry averages, she explained, while those at this stage should engage suppliers to use a mix of specific and secondary data.

Pukka Herbs’ sustainability manager Vicky King told of how the company has provided farmers producing its most-used herbs with a digital app that calculates the emissions of their precise activities in-context.

3) Build a strong business case for action

When asked about the costs associated with addressing Scope 3 emissions, Mulder admitted that it “can be an expensive process”, particularly for companies conducting full primary data analysis.

Beyond seeking partners that could share existing data, reducing some of this cost, the speakers recommended that listeners build a strong business case that goes beyond short-term cost and covers a broader set of metrics in a long-term view. Mulder spoke about the growing movement towards legally binding net-zero targets; changing investor demands; new reporting requirements and consumers’ ability to see past sustainability commitments which shirk the bulk of a company’s responsibility.

King, meanwhile, urged listeners to “link climate action across Scope 3 to the purpose of the company”. For Pukka Herbs, the impacts of a warming client on agriculture threaten the security of ingredient supply, making this a business-critical issue.  

4) Align your targets with science

The speakers agreed that setting approved science-based targets is the best practice for businesses wishing to “reduce the amount of carbon which the world needs” – i.e. align with the Paris Agreement and contribute to the shared mission to cap the global temperature increase. This approach has become more and more popular since the Paris Agreement was first ratified. Some 460 companies are aiming to have their targets approved by the Science-Based Targets initiative (SBTi) at present, while 510 already have approved targets.

Mulder highlighted the fact that the SBTi will require businesses to set Scope 3 targets if they wish to be classed as 1.5C compatible and if Scope 3 sources account for 40% or more of their annual emissions footprint. Such targets must have boundaries which address two-thirds of total Scope 3 emissions.

Her advice for businesses wishing to create such targets was to conduct Scope 3 data gap analysis, screening and modelling before coming up with deadlines, percentages and roadmaps. In order to ensure that meeting climate targets does not result in unintended negative consequences, she also recommended that businesses embed their science-based targets in their wider ESG or CSR strategy.

5) Collaborate internally and externally

The one keyword to have been used during the webinar was collaboration. Businesses wishing to take ambitious action on Scope 3 emissions will, of course, need to effectively engage actors across the value chain. Suppliers will be of particular importance for most businesses and, according to Mulder, will “want to come on the journey because they know that their responsibilities count”.

Sustainability and energy professionals will also need to engage colleagues in other departments like finance and procurement to ensure that processes are driving progress towards Scope 3 targets, King explained. Pukka Herbs is using the Do Nation platform to gamify the process of learning about carbon accounting, as it enables departments to compete with each other on which can undertake the most education and complete the most activities.

External partnerships were also floated numerous times, both as a way to amplify impact and to make the accounting process more efficient. Pukka Herbs is using its work with the Big Clean Switch and with the Climate Group’s RE100 for the former purpose. For the latter purpose, trade bodies may already have calculations pertaining to a particular material, or be willing to help your business conduct an analysis.

A further benefit of collaboration is minimising the risk of double-counting, Carbon Intelligence’s senior sustainability consultant Annabel James explained.

“It’s acknowledged that there will always be an element of double-counting within Scope 3 accounting because everyone is looking within their value chain and there will be a bit of crossover,” James said. “But not everybody in your sector is going to be leading in sustainability, so, at the moment, it’s better to be looking into this in detail and work collaboratively to reduce value-chain emissions than to say ‘I’m not doing this because someone else will’.”

Pukka Herbs’ King agreed, stating that the fear of double-counting “is not a reason not to start, but it is a reason to make sure that you’re working very closely with actors across your value chain.”

The full masterclass webinar is available to watch on-demand here.

edie Staff