If you’ve been keeping up to date with the latest sustainability news, you know that the EU signed its new Corporate Sustainability Reporting Directive, CSRD for short, into law this past November. You also know that you’ll have to include much more detailed Scope 3 reporting now. And that this is just the beginning in the increasing regulations around emissions.
But did you know that regulations might not be your biggest sustainability concern?
To help you navigate how Scope 3 emissions can impact your company and how your supply chain can impact your Scope 3 emissions, we put together this short video series:
The rising focus on Scope 3 emissions comes down to something called ‘double materiality.’ It means looking at both how the changing climate will impact your business and how your business will impact the changing climate.
The problem with that is that Scope 3 reporting is notoriously difficult. Especially because sustainability data and supply chain data don’t always speak the same language, making compatibility an issue. That’s why all but the most climate-oriented (or highly regulated) companies have been putting it off.
See, because Scope 3 covers emissions you don’t have direct control over, you usually don’t have control of the data about them either. And while you may have a few providers who are happy to share the details of how much they’re emitting, the ones who will are few and far between.
And even with those who do, you run the risk of their reporting being inaccurate or, worse, intentionally misleading.
So getting accurate Scope 3 emissions data that you have control over is hugely important. Not only for keeping compliant with regulations, but also because your customers are more aware of green issues than ever.
And regardless of how much or little you’re emitting, they are going to want to see that you know what your emissions really are and that you’re taking action on them.
While reporting on Scope 3 emissions is going to be important, it’s crucial to explore how important it is to take your supply chain beyond simply reporting. Because these days, just knowing your emissions isn’t enough.
Most big businesses either have or will have, emissions reduction targets in place. It’s a necessity as part of your planning for the future and is often a requirement from investors.
But those targets rarely get decided by supply chain leaders. Instead, you’re getting handed targets and told to figure it out.
These targets are usually very ambitious and time-locked. Which means you’re under pressure to come up with a good solution fast. So within that timeframe, you need to find a way to both measure your scope 3 emissions accurately, but also act on them swiftly with data-driven proof that you’ve actually made a difference.
Besides the targets coming from head office, customer awareness is putting pressure on you too. Because the eco-aware customers of today aren’t content with just any plan. Claims of greenwashing are frequent and can cause significant reputational harm.
Using methods like carbon offsetting can open you up to greater scrutiny. Especially with the recent findings that one of the most prominent offsetting organisations was selling false carbon credits. While that may not apply to all offsetting organisations, the concern is still prevalent amongst customers.
Meanwhile, taking action, even if the first steps are small, is looked on much more favourably by your customers.
To do that well, you need data that a) tells you how much you’re emitting, b) where these emissions are coming from and c) what your alternatives are.
For some, it could be as simple as making changes to the routes your product takes. For others, you might find that working with different carriers altogether helps. Or the volume in each shipment needs to change. There are many ways to reduce your emissions before you even get to big-ticket items like electrifying your fleet. After all, in its most basic form, the emissions equation is all about the simple physics of getting from point A to point B in the best way possible.
On top of what you need to do for your supply chain to stand out as best-in-class around emissions, you are probably wondering what else you can be doing to stand out as a sustainability focused supply chain leader.
So here are some of the best ways that you can stand out and get ahead of the sustainability curve as a supply chain leader:
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Be proactive - This is the best thing you can do to stand out. While you’ll still probably have targets coming to you from other parts of the business, being able to have a plan ready and bring it forward right away shows initiative and can save the company (and yourself) precious time in the sustainability race.
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Use data - Because concerns about greenwashing are so rampant at the moment, your company, and by extension you, will need a way to calmly counteract any claims with data to back you up. It also is necessary for figuring out where you started and how much of an impact your strategy has really made.
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Understand Science-Based Targets - A lot of the targets that are being chosen are based on the Science Based Targets initiative. It’s a partnership between major organisations, including the United Nations Global Compact. Businesses are aligning to these ambitious standards to show that they’re pioneers in net-zero. An important competitive edge.
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Make outcome-driven decisions - Making outcome-driven decisions really just means taking your business’ priorities into consideration when you make your plans. For example, with a tentative economy right now, your company is probably cost conscious. So find a way to act on cutting costs and carbon simultaneously. If you want to learn more about how to do that, I’ll leave a link to our Green Ratio paper where we explore exactly that idea.
Now, supposing you’ve got your emissions baseline calculated, what comes next? Having that first set of data will get you through your initial reports, but it won’t take you much further.
Instead, you’ll need a way of making that data work with your supply chain data. And those two types of data don’t always speak the same data language, which makes them pretty hard to navigate.
You’ll also need to be able to tell which parts of your supply chain are the biggest emitters. And what happens if you change them.
That means you need some way of testing out your hypotheses without letting extra carbon into the atmosphere if things don’t pan out. AI-based simulations are a great way to explore the possibilities.
I’m going to be a little biased with this part, but because we really do believe in the power that supply chains have to change the world, we’ve been working on a new part of our product that solves those sorts of problems.
With the Scope 3 emissions layer of the 7bridges platform, you can access the data that your suppliers either don’t have or aren’t sharing. We use the GLEC framework to make sure that the data is both accurate and appropriate for your reporting.
And, because we’re focused on supply chains first, we make sure all of that data can be easily fed into that planning.
Thanks for joining me for this short series, I hope this has helped you understand scope 3 emissions a little better and given you a glimpse into how you can start decarbonising your supply chain.