Anthony Ainsworth, COO at npower Business Solutions
2021 has certainly been a year of major announcements around net zero, from the government publishing its long-awaited Net Zero Strategy, through to organisations in both the private and public sectors committing to ambitious carbon reduction plans.
This growing focus has also brought increasing scrutiny on exactly how organisations are measuring and managing their carbon impact. We know from our recent ‘Plot Your Path to Net Zero’ series, that organisations are taking the decarbonisation of their operations seriously, with many considering long-term investments such as sustainable on-site generation to reduce emissions and increase resilience.
With great strides being taken to reduce the ‘direct’ emissions from premises and power supply, attention is now turning to the ‘indirect’ emissions from the wider value chain. In the private sector, many businesses are aligning their plans through the Science Based Target initiative (SBTi), and a key part of this is putting strategies in place to reduce Scope 1, 2 and 3 emissions as outlined in the GHG Protocol.
While SBTi does not apply to the public sector, the principle of assessing emissions across all three Scopes should be best practice for all organisations.
What are the three Scopes?
According to the GHG Protocol, they are defined as:
- Scope 1 covers direct emissions from owned or controlled sources. This includes fuel combustion and company vehicles
- Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling
- Scope 3 includes all other indirect emissions that occur in a company’s value chain. This includes business travel in non-company vehicles as well as employee commuting. It also includes emissions arising from your purchased goods and services and both upstream and downstream transportation and distribution
Scope 3 can account for up to 90% of an organisation’s emissions, so it’s no surprise that including them in any carbon reduction strategy is growing in importance. This came into greater prominence earlier this year when the government announced that all businesses tendering for major contracts will need to demonstrate their net zero commitments if they are to be successful.
Many public sector procurement teams are following suit and are demanding sustainability standards from their wider supply chain in order to meet their own carbon reduction objectives.
However, measuring Scope 3 emissions can be challenging as it involves acquiring adequate and accurate data from across the value and supply chain. The administrative challenge of drawing data together from disparate sources and turning it into meaningful information that can be acted upon requires engaging with your suppliers.
This means that successful progress begins with the complex task of engaging a supply chain, which may exist across geographical and cultural boundaries. It’s no mean feat, and will create different challenges for each organisation.
For us, there are fivesteps to take for better collaboration:
- Set clear expectations for your suppliers. Consider incentivising supply chain partners to improve their carbon reduction measures and their data gathering methods. Have a clear criteria for any new suppliers you enlist, as well as internal procurement targets that have environmental and ethical standards built in
- Set up interviews with suppliers to better understand their processes and people, and to get a view on where improvements could be made, as well as their obstacles to carbon reduction
- Facilitate workshops with key suppliers to help them understand where action could be taken on carbon reduction. This will also provide a forum for peer-to-peer support and will help to foster innovation and encourage an exchange of best practices
- Provide co-branded training materials for your suppliers’ teams, to help them spread the word on net zero and get everyone behind the efforts you are making to reduce carbon
- Get your internal stakeholders onboard right from the outset. The best results will be achieved by having input and oversight from right across your business, including procurement teams and the c-suite. Your net zero strategy needs to align with broader business objectives if you want to ensure that everyone is invested in driving carbon reduction action forward.
The broader benefits of Scope 3
We know that putting together a sustainability plan can be time consuming, particularly if you don’t have an in-house expert dedicated to that role. Add in the complexities of calculating Scope 3 emissions, and the task can be daunting.
However, there are several benefits to taking a proactive approach to Scope 3. As well as boosting efficiency and productivity across the value chain, it will also set your organisation apart as a sustainability leader, helping to unlock commercial opportunities as well as retaining and attracting fresh talent.
That is why we have created a new guide – ‘Scope 3 and Your Road to Net Zero’ -to provide advice and ideas on where to start, which can be downloaded here.