To Scope 3 and beyond in procurement and supply chain
It is sometimes misunderstood that a company’s scope 3 greenhouse gas emissions are simply the aggregated scopes 1 and 2 emissions of their suppliers. This is then used to justify the decision to not report the company's scope 3 emissions. It has been said that if all companies simply report their scopes 1 and 2, then there would be no need for these other indirect emissions to be reported at all.
However, there are 15 different sources of scope 3 emissions as defined by the greenhouse gas protocol corporate reporting standard, and they are often the largest contributors to an organisation's carbon footprint - and not all of them can justly be laid at the foot of the supply chain.
Let’s take this back a step.
Scope 1 emissions are direct emissions from sources such as stationary combustion, for example furnaces, ovens and central heating, plus direct mobile combustion such as from company owned-vehicles like company cars or delivery vans.
Scope 2 emissions are indirect emissions from purchased energy sources, most commonly, this is electricity bought in to operate the business lights, IT and machinery.
And while scope 3 will include suppliers’ scope 1 and 2 emissions, it also includes items that are very much the emissions of the reporting organisation.
Let’s examine these scope 3 emissions sources and consider if there is a legitimate reason to omit them.
1. Emissions from business travel
For example, if an employee of the company travels to a business meeting in their own car and then re-claims that in expenses, these, are classified scope 3 emissions. And organisations can elect to encourage more remote meetings, they can encourage greener travel with bicycle purchase schemes, rail travel season-ticket loans and incentives for employees to buy electric cars as their private car.
2. Transmission and distribution emissions resulting from the purchase of electricity
While the electricity bought in, is part of scope 2, the transmission and distribution losses belong to scope 3. Not reporting scope 3 emissions means that this element of electricity used in the running of the business is not recorded at all.
3. Water use and treatment
There are plenty of good options allowing the reduction of supplied water use. These include harvesting of rainwater, water re-use in a grey water system, maintenance and prevention of leaks and losses, and fitting water reduction gadgets to hand washing basins and toilet cisterns. Reducing the quantity of water supplied saves money, conserves an essential resource, reduces the quantity of wastewater to be treated, reduces your greenhouse gas emissions - and belongs in scope 3.
4. Waste disposal
How a company disposes of their waste materials is included in scope 3. The organisation can choose to dispose of refuse by landfill, or by separating-out their waste for recycling. They can play an active part in reducing waste materials so that the amount disposed of is less.
Money is a powerful enabler. An organisation has the opportunity to select investments that are environmentally responsible. They might invest in green bonds or they might choose to invest without taking into account the profile of their investments. This choice is still within the organisation's power, and can be one of the greatest tools in the fight against climate change. Move the money, move the power. Investments are part of your scope 3 emissions.
6. Freighting and transport
When transporting goods or mail packages, an organisation can select how those items are freighted. We can select the type of transport with the lowest carbon emissions for this purpose. For example, larger cargo ships have a smaller carbon footprint per tonne of goods conveyed, and transport by train has a lower carbon footprint than transport by HGV. Changes can be made to ensure optimal use of freighted loads, and how they are packed can be based on reusability of packaging materials.
All in all, organisations have control over, and choices regarding a very large element of its scope 3 emissions. As such it is not acceptable to plead that scope 3 is out of their control and effectively in the remit of their suppliers only.
Moreover, a corporation that is committed to environmental responsibility has the opportunity to work with their wider-value chain to facilitate visibility and greater understanding of the scope 3 emissions that do include their suppliers’ emissions.
A larger organisation can empower their supply chain. There can be either a carrot or a stick approach to this.
They can work with their supply chain, collaboratively providing support, information and active technical support to suppliers in developing their greenhouse gas inventories and carbon reduction plans.
Alternatively, a ‘stick’ approach could be taken by requiring suppliers to have a carbon reduction plan in order to be included in the supply chain.
Ultimately, we're all in this together. We only have one planet and all of us will be adversely affected by climate change. It makes both business and moral sense to be on the side of your suppliers, and to provide them with a collaborative framework through which we can all collectively arrive at a low-carbon economy.
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