Procurement and Supply Chain LIVE: Sustainability saw inspirational leaders gather at the intersection of procurement, supply chain and sustainability. 

On Day 1, a panel of esteemed experts gathered to discuss the complexities of managing Scope 3 emissions on a global scale, exploring both challenges and opportunities.  

They were:

• John Trenchard, Vice President Commercial and Supply Chain, UK, DP World
• Megan Youngs, Scope 3 Reporting Manager, Natwest
• Stuart Harker, Senior Carbon & Sustainability Manager, Accor
• Marc Munier, CEO, Ditch Carbon

Their fascinating conversation centred on meaningful strategies designed to combat Scope 3 and the matter of how to obtain reliable data from suppliers.

How have Scope 3 strategies evolved in recent years?

John Trenchard: A lot of people are talking about it, which is great and certainly in our industry a lot of it's triggered from regulations. In the maritime space, we've got the emissions trading scheme now applicable to the industry; we've got the Carbon Border Measurement that's starting to come in, although there are some changes to that legislation; we've got Fuel EU Maritime which is coming in as well, which is what's being burned in the vessels which are there; and all manner of reporting requirements, although of course that's a dynamic environment and lots of updates happening there. So, I think the regulations are coming through and people are prepared now to explore this further into the supply chain.

Stuart Harker: It's become a bit more mainstream. So it's become part of what we talk about in business reviews. A lot of people know what Scope 3 means nowadays. Maybe 10 years ago when I was sitting in weird little conference rooms in Brussels talking about product environmental footprint, maybe not. The data's driven it; it's become more mainstream.

What are the biggest challenges companies face when trying to measure and manage their Scope 3 emissions?​​​​​​​

Megan Youngs: Greenhouse gas protocol came out years ago and we're getting the update hopefully this year. So, I think we're all sort of in limbo waiting for that methodology update and people are starting to find the grey areas and understanding how we can actually report on this. I'm really looking forward to that being published. I think there are more challenges around data lags as well, so from suppliers that take a year to report or will get a year to receive the data, but not just from suppliers but also industry averages as well. Can we see a more frequent update of suppliers so we can track that action better? I think that’s going to be the next step?

Marc Munier: We’ve got five years until 2030. If you’re working on an annual basis, that’s five opportunities to change something. You do that quarterly, you've got 20; you do it monthly, you've got 60. With any sort of data you're tracking, getting regular data is critical to reduce the reporting burden. I think there's a certain amount of data you need from your suppliers. Have you actually driven decarbonisation of their Scope Two in all of your supply chain? If you've done that already, go and ask them for something else. 

How big a challenge is it to get reliable data from suppliers, especially as you go down the tiers?​​​​​​​

Stuart Harker: Last year, we completed a big campaign on engaging with our suppliers: 5,500 hotels globally, a similar number of suppliers and then all of the products and the services that go into those supply chains. We looked at the maturity of our suppliers, identified 80% of their spend-based approach and then spoke to them and spent time with those suppliers to really understand them. Now, our category directors and category managers really know their suppliers. Last year, we really understood the landscape of our supply chain. 

Marc Munier: Stuart's taken the appropriate approach, which is to track the maturity of your suppliers. What we see is that small ones don't matter. There's a lot of talk about how you deal with immature suppliers – they're an immature supplier, they're probably not a big contributor to you. There may be some cases where they are, but it's very few and far between. The reason big companies are big companies is because they supply lots of other companies. So, those big companies have the most regulatory pressure and are generally more mature in their sustainability approach. Yes, there are immature suppliers in your supply chain, but don't worry about it because they're tiny. Again, once you've done the big stuff, worry about the small stuff later.

With so many tech solutions available, how do you go about picking the right ones?​​​​​​​

John Trenchard: AI works on data and learning data. London Gateway (operated by DP World) is a big container terminal. We’ve got 50,000 containers which are all mixed up and then the trucking company comes in and we have to play Tetris and touch each box about seven times. If the truck driver told us 12 hours in advance, “I want that box”, we could just touch it once and then put it on the truck, saving CO2 efficiency, money and time. So, we’ve used tech to start thinking about not just solving the problem with AI after the fact, but up front. For example, at London Gateway, before the end of the year, if you nominate your container more than 12 hours in advance, we will pay you £5. If you book at the last minute, we will charge you anything up to £14 pounds because we've got to play Tetris, which is bad for the environment and bad for efficiency. Then, our AI bots don't have to deal with quite so much chaos because we've taken that out of the data system.

Megan Youngs: We rely on a lot of software. We've got a big technology footprint as a bank and we're hearing trends of tech stacking. People aren't using the golden bullet for the one software. So, you've got software for data collection – we’re currently trying to set up a proof of concept with Ditch Carbon, Then you've also got the carbon calculation software; you could have a supplier engagement software and then a risk software. As long as they all talk together, which would be the dream, every team and stakeholder within the organisation is happy.

Can you give some examples of Scope 3 strategies or programmes that have made a real difference?

John Trenchard: You've got “do nothing”, you’ve got offsetting and then you've got insetting. I’m not suggesting [insetting] is the final solution, but it does give a pragmatic option to make change. I would strongly suggest that we explore further how we can use insetting, which is a kind of parallel to some of this data which is being used to address Scope 3. In the UK, every import container that comes over the quay at Southampton and at London Gateway earns a 50 kg carbon inset credit, where we’ve put lower carbon maritime fuel into our ships in Northern Europe. If you want to claim that, it’s included in the port charges. You just register and get your certification every quarter for every single container that you've imported included in the price that you're paying. That’s available now and we’ve got more than 150,000 signed up so far in just over two months. 

Megan Youngs: I was quite inspired by Jaguar Land Rover's strategy. They took carbon footprint and almost invested the tax, like an internal carbon price. They took the price from anything that was over their limit and invested it back into their supply chain with other suppliers, which I thought was really interesting because, if the supplier isn't going to cooperate, you could tax them and put it into suppliers that will help. I found that interesting from a personal manufacturing interest.

Stuart Harker: I think it’s a natural extension to start talking about insetting with suppliers. Going back to the less mature suppliers at a grassroots level, it’s an interesting discussion. Sometimes, I see companies with quite sophisticated ideas around insetting, but I don’t think it’s a case of offsetting or insetting – we need all the tools in the bag. The insetting discussion is one that will develop. It’s an interesting idea and there are a handful of companies integrating that into their carbon strategies. It may not be coming to the fore at the moment, but it'll probably come to the light of day in five to 10 years’ time.

To read the full article in the magazine, click HERE.

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