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Managing Scope 3 Emissions for a More Environmentally Friendly Supply Chain

Companies frequently discuss their carbon footprint, predominantly focusing on emissions from their own facilities or purchased energy. Yet, they often overlook indirect emissions, such as those stemming from their suppliers or the products they manufacture.

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Achieving Command Over Greenhouse Gas Emissions in the Entire Supply Chain for a More Sustainable...
Achieving Command Over Greenhouse Gas Emissions in the Entire Supply Chain for a More Sustainable Business Operation

Managing Scope 3 Emissions for a More Environmentally Friendly Supply Chain

In the pursuit of a greener future, companies are increasingly focusing on reducing their carbon footprint. However, addressing Scope 3 emissions, indirect emissions that occur outside a company's direct operations, is crucial for a comprehensive approach. These emissions, as defined by the Greenhouse Gas (GHG) Protocol, encompass a wide range of activities, from raw material sourcing to product disposal by consumers.

The GHG Protocol categorises Scope 3 emissions into 15 distinct categories, helping businesses identify and organise their various sources of indirect emissions. These categories can be broadly divided into upstream and downstream activities.

Upstream activities include purchased goods and services, capital goods, fuel- and energy-related activities, and upstream transportation and distribution. For instance, emissions from the production of goods and services that a company purchases, such as raw materials, are classified under purchased goods and services. Similarly, emissions from the extraction, production, and transportation of fuels fall under fuel- and energy-related activities.

Downstream activities, on the other hand, include downstream transportation and distribution, processing of sold products, use of sold products, end-of-life treatment of sold products, downstream leased assets, franchises, and investments. For example, emissions from transporting products from the company to the end customer are categorised under downstream transportation and distribution. Emissions from the use of products by the customer fall under the use of sold products.

Collaboration across the value chain with suppliers, consumers, and partners is essential for addressing Scope 3 emissions. Teaching consumers how to dispose of goods responsibly and use them sustainably can help reduce Scope 3 emissions in categories like "use of sold products." Involving suppliers in the measurement, management, and reduction of their own emissions is another effective strategy.

Companies have less direct control or influence over Scope 3 emissions compared to Scope 1 and 2 emissions. However, they can focus on key areas such as business travel, use of sold products, and purchased goods and services for effective reduction. Rethinking product design and innovation to cut lifetime emissions can also help reduce Scope 3 emissions.

Gathering data for Scope 3 emissions, especially from millions of consumers and numerous vendors, can be a challenging task. Setting specific, quantifiable goals for Scope 3 reduction and monitoring progress can help businesses adjust their strategies as needed. Ignoring Scope 3 emissions can result in a significant portion of the carbon footprint puzzle being overlooked and a missed opportunity for influence.

Addressing Scope 3 emissions offers benefits beyond a reduced carbon footprint. Lowering reputational risk, identifying cost savings, finding new business opportunities, and promoting more sustainable supply chain resilience are just a few of the advantages. As the world moves towards a more sustainable future, understanding and addressing Scope 3 emissions is key for companies aiming to make a meaningful impact.

[1] Greenhouse Gas Protocol (2021) Scope 3 Standard. Retrieved from: https://www.ghgprotocol.org/scope-3 [2] Greenhouse Gas Protocol (2021) Scope 1 and 2 Standards. Retrieved from: https://www.ghgprotocol.org/scope-1-and-2 [3] Greenhouse Gas Protocol (2021) Scope 3 Calculation Guide. Retrieved from: https://www.ghgprotocol.org/resources/scope-3-calculation-guide [4] Greenhouse Gas Protocol (2021) Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Retrieved from: https://www.ghgprotocol.org/scope-3-standard

  1. To effectively address climate-change and create a more sustainable future, companies should focus on the reduction of Scope 3 emissions, as defined by the Greenhouse Gas (GHG) Protocol, which encompass a wide range of activities, including upstream and downstream activities.
  2. Collaboration with suppliers, consumers, and partners is essential for reducing Scope 3 emissions, particularly in categories like "use of sold products," by educating consumers on responsible disposal and sustainable use of goods, and by involving suppliers in the measurement, management, and reduction of their own emissions.
  3. Beyond a reduced carbon footprint, addressing Scope 3 emissions can provide businesses with benefits such as lowering reputational risk, identifying cost savings, finding new business opportunities, and promoting more sustainable supply chain resilience, making it key for companies aiming to make a meaningful impact towards a more sustainable future.

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