This article was first published in First Voice. Written by Chris Bowden, founder and managing director of clean energy marketplace Squeaky.
Emissions produced in an organisation’s supply chain, Scope 3 emissions, account for 80 to 90 per cent of the emissions connected with a great deal of end-products. As a result, one could argue that they are the most important emissions to address and reduce.
That said, the materials needed to help businesses meet their green goals – those with lower emissions intensity such as green steel – are already in low supply. And while some larger businesses will have locked in supplies of low-emission materials already, other smaller firms may still be some way behind.
There are a number of long-term, and indeed short-term, initiatives that can help smaller businesses navigate the complex maze of sustainable sourcing and help them make the right decision. Here’s how you can protect your business from the difficulties of sustainable sourcing:
1. Make long-term decisions
Many businesses have drawn up long-term strategies for reducing Scope 3 carbon emissions. And although the race to secure low-emission resources is still in its infancy, efforts appear to be focused in three key areas.
Firstly, businesses are helping partners in their supply chain switch to 100 per cent clean energy. Not only will this help to decarbonise their energy use, it will also help improve their own credentials with a commitment to the purest energy source.
Secondly, the mix of materials used to make a product is being modified. For example, using cleaner materials or developing products that can be recovered easily for recycling or reuse.
Thirdly, businesses are collaborating with their suppliers to develop production capacity for green materials and to implement low-emissions processes. Businesses that establish green-sourcing partnerships now can expect them to yield benefits starting in three to seven years.
2. Invest in new capabilities
Supply chain management is just one piece of the Scope 3 emission jigsaw. To reduce Scope 3 emissions, the majority of businesses will also need to invest in a number of capabilities to upgrade equipment processes. For example, analytical and strategy-setting, product or packaging design, and engineering.
It’s no secret that remodelling a business in this way will take time and resource. However, businesses cannot afford to delay action when it comes to reducing Scope 3 carbon emissions and investing upfront now will pay longer term.
3. Measure all insights
In the near term, it’s beneficial for businesses to develop their understanding of the emissions produced in the manufacturing of every material, as well as the exposure to supply, demand and price volatility of every material acquired.
It is worth noting that Scope 3 emissions and risk exposures can differ hugely among businesses, and this is also the case for the goods obtained by a business.
4. Track emissions
Unfortunately, very few have mastered the skill of tracking and tracing emissions. And fewer still have mapped their supply chain emissions using primary data.
In fact, research presented at the World Economic Forum by Carbon Intelligence identified that a lack of high-quality data is the most common challenge in managing Scope 3 emissions. Without accurate data from within the supply chain, decision-makers are often left relying on guesstimates.
However, some businesses have already acknowledged how important data is to the decarbonisation of their supply chain. Having the right digital tools that provide up-to-date and valid information can help businesses to avoid greenwashing accusations too.
We know that businesses which work to decarbonise their supply chain and reduce their Scope 3 emissions are likely to face some huge challenges. However, these are challenges that must be tackled head on. Not least because, if businesses continue to pump out polluting fuels, our world will deteriorate at a cataclysmic rate.
Those businesses that act now and plan for the future will make significant progress on their mission to reduce Scope 3 emissions and will help us all on the journey to a cleaner, greener planet.