How does engaging with suppliers impact Scope 3 emissions?

Engaging with suppliers is perhaps the most important factor in reducing Scope 3 emissions, as upstream activities often account for a significant portion of a company’s carbon footprint. Companies should collaborate with suppliers to enhance their environmental performance by setting joint emission reduction targets, providing training and resources, and establishing supplier sustainability programs.

7 levers to reduce your company’s scope 3 emissions

Companies are facing growing pressure to reduce their carbon footprints, particularly regarding Scope 3 emissions, which make up the majority of a company's total carbon footprint. The Carbon Disclosure Project (CDP) reports that Scope 3 emissions represent, on average, 75% of a company's greenhouse gas emissions (GHGs). These emissions originate from various sources and provide a complete picture of a business's carbon footprint by covering the entire value chain. However, managing these emissions is the most difficult task for companies. Accordingly, this article will deep dive into the essential steps businesses must take to efficiently reduce their Scope 3 emissions and undergo value-chain wide decarbonisation.

What are Scope 3 emissions?

Scope 3 emissions, often referred to as value chain emissions, include all indirect emissions that occur throughout a company's upstream and downstream supply chain. In contrast to Scope 1 emissions, which are direct, and scope 2 emissions, which are indirect and related to energy, Scope 3 emissions cover a wide array of activities, ranging from supplier processes to the use of products sold. The GHG Protocol divides Scope 3 emissions into 15 categories, such as purchased goods and services, capital goods, business travel, and waste generated by operations.

Overview of Scopes and emissions across the value chain.
Credit: Plan A based on the GHG Protocol.

How to reduce your company’s Scope 3 emissions?

To effectively reduce Scope 3 emissions, companies should prioritise gathering accurate emissions data, setting ambitious targets, implementing diverse reduction strategies, and consistently measuring and tracking their impact. The Science Based Targets Initiative (SBTi) recommends the following seven strategic approaches to help reduce a company's Scope 3 emissions:

Lever for Scope 3 reduction	Detailed explanation
1. Business model innovation	Transformative business models can have a substantial impact on Scope 3 emissions. For instance, transitioning from a product-based model to a service-based model, such as leasing instead of selling, can decrease emissions by extending product lifespans and improving resource efficiency. Implementing circular economy principles, including product recycling and reuse, can also reduce waste and emissions.
2. Supplier engagement	Engaging with suppliers is perhaps the most important factor in reducing Scope 3 emissions, as upstream activities often account for a significant portion of a company’s carbon footprint. Companies should collaborate with suppliers to enhance their environmental performance by setting joint emission reduction targets, providing training and resources, and establishing supplier sustainability programs.
3. Procurement policy and choices	Leveraging sustainable procurement policies is another effective strategy. Companies can prioritise sourcing from suppliers with lower carbon footprints and choose sustainable materials and products. Incorporating carbon reduction criteria into procurement decisions and contracts can lead to substantial reductions in Scope 3 emissions.
4. Product and service design	Designing products and services with sustainability as a priority can lower emissions throughout their lifecycle. This involves selecting low-impact materials, optimising production processes for energy efficiency, and designing products for longevity and recyclability. Conducting life cycle assessments (LCAs) can help identify opportunities for emissions reduction in product design.
5. Customer engagement	Educating and involving customers can lead to reductions in downstream emissions. Companies can encourage the sustainable use of their products, offer recycling incentives, and provide guidance on reducing carbon footprints. Effective customer engagement strategies can influence consumer behaviour, reducing emissions associated with product use and disposal.
6. Operational policies	Adopting operational policies that focus on sustainability can also affect Scope 3 emissions. This includes policies concerning business travel, employee commuting, and waste management. Examples include promoting remote work to cut down on commuting emissions, encouraging the use of public transport, and implementing waste reduction programs within the company.
7. Investment strategy	Aligning investment strategies with sustainability goals can significantly reduce Scope 3 emissions. Companies can invest in low-carbon technologies and renewable energy projects while divesting from fossil fuels. This approach is a key lever to reducing Scope 3 emissions, thus supporting the global transition to a low-carbon economy.

Emissions reduction strategies are interconnected, and the interdependencies within Scope 3 inventories provide opportunities for collaboration and innovation. This creates a virtuous cycle where companies can lower emissions across their value chains while benefiting from the efforts of others. Additionally, it enhances the accuracy of data used for setting targets and tracking progress, encouraging the development of innovative, system-wide solutions.

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Why is it so important to reduce your company’s Scope 3 emissions?

Decarbonising Scope 3 emissions is essential because they constitute the largest portion of a company’s carbon footprint. By addressing these emissions, companies can substantially reduce their overall environmental impact and contribute to the global climate goals outlined in the Paris Agreement. Focusing on Scope 3 emissions can also enhance corporate reputation, meet stakeholder expectations, and ensure compliance with increasing regulatory requirements. Companies that excel in this area can unlock business opportunities such as cost savings through improved efficiency, innovation in product design, and the potential to capture green market premiums.

While reducing Scope 3 emissions is complex, companies like Plan A can provide valuable assistance. Our platform offers precise data collection, automated CO₂ emissions calculation, strategic carbon reduction planning, and audit-proof ESG reporting. Plan A’s comprehensive solutions empower businesses to measure, mitigate, and communicate their carbon impacts, ensuring a holistic approach to sustainability. By leveraging Plan A’s advanced tools, companies can effectively address Scope 3 emissions, meet ESG regulations, and transparently share their progress, paving the way for a greener future. As climate change discussions continue, the importance of Scope 3 will only increase, making it crucial for businesses to embrace and act upon it now.