Companies responding to the CDP Climate Change questionnaire are rewarded for setting science-based targets. However, many companies committing to the Science-Based Target initiative (SBTi) are failing to meet the SBTi criteria, and the largest reason for failure is the inability to meet the Scope 3 requirements.
For many global businesses such as SBT, Optus and Pfizer, supply chain emissions contribute a significant proportion of their total carbon footprint. In an ideal world, everyone would commit to their fair share of the effort required to keep the world under a 2 degree increase in average temperatures and hence scope 3 emissions would not need to be considered. We are however far from this ideal situation. Therefore, all Science-Based Targets need to include these Scope 3 emissions sources and companies need to work with their upstream and downstream partners to reduce their Scope 3 emission inventory. However, assessing supply chain carbon emissions is typically not an easy task, and the more diversified the supply chain is, the more difficult it becomes. Therefore understanding where greenhouse gas emission ‘hotspots’ are in a company’s supply chain is often the first step in developing a pathway to setting and achieving a Scope 3 SBT.
One way of identifying and quantifying these supply chain emissions is to apply an Economic Input-Output Life Cycle Assessment (EIO-LCA) method to supply chain expenditure. This estimates the materials and energy resources required for, and the greenhouse gas emissions resulting from, activities in the economy, and can be applied to a company’s supply chain, for a first estimate relying on industry averages. The image below shows a high-level overview of Optus’ SBT setting process, which used EEIO methods to identify supply chain emissions, and was integral to their Sustainable Supply Chain Management (SSCM) strategy.
Point Advisory have the capability to assist your business in:
- Completing a Scope 3 screening exercise in line with the SBTi requirements
- Identifying primary and secondary data sources for calculating your Scope 3 emissions
- Developing a Scope 3 supply chain inventory using the latest EEIO models.