Click here to register for our webinar on the 27th of February, Mastering Supply Chain Decarbonisation: A Practical Guide
Organisations across the private, public, and non-profit sectors have set ambitious targets to reach net-zero emissions. This means not adding more greenhouse gas emissions to the atmosphere than are removed. While specific targets and standards vary, the most common definition, as outlined by the Science-Based Targets initiative (SBTi), requires companies to reduce emissions by 90% compared to a baseline year, with the remaining 10% offset through carbon removal strategies.
Crucially, this includes Scope 3 emissions, or indirect emissions over which a company has no direct control. This creates a dilemma for organisations trying to reach net zero. While organisations can directly influence their direct emissions, controlling the emissions of their suppliers requires a strategic approach. Because Scope 3 often accounts for 60 – 80% of an organisation’s emissions, integrating climate strategy into procurement policy is vital for a net-zero world.
How can organisations reduce emissions they don’t directly control? Join our webinar on the 27th of February, where we’ll discuss Scope 3 measurement methodologies, supply chain engagement, and procurement strategy to reduce emissions from the largest contributor to most organisations’ carbon footprint.
In this blog post, we will delve into the intricacies of net-zero procurement and explore how organisations can leverage this powerful tool to reduce their Scope 3 emissions and contribute to a more sustainable future.
A Spend-Based Approach: Your First Step to Scope 3 Insights
A crucial initial step in reducing Scope 3 emissions is conducting a spend-based emissions assessment. This approach involves estimating emissions based on the amount spent on different goods and services. While not the most precise method, it provides a valuable overview of your supply chain’s carbon footprint, particularly for organisations new to Scope 3 measurement.
By identifying high-impact spending categories, the spend-based approach enables you to prioritise supplier engagement efforts. This targeted approach is essential for driving significant reductions in Scope 3 emissions, as we will discuss in more detail below.
Engaging Your Supply Chain: A Key to Scope 3 Success
Engaging and forming partnerships with your suppliers is a critical step in reducing Scope 3 emissions. This collaborative approach not only enhances data accuracy and transparency but also empowers suppliers to reduce their own emissions, ultimately benefiting both parties.
It’s important to remember that your suppliers’ emissions directly impact your own Scope 3 footprint. By working together, you can drive innovation, share best practices, and achieve shared sustainability goals.
To maximise the impact of your supplier engagement efforts, consider the following:
- Prioritise High-Impact Suppliers: Conduct a materiality assessment (based on your spend-based calculations above) to identify the suppliers that contribute most significantly to your Scope 3 emissions.
- Phased Approach: Implement a phased approach to supplier engagement, focusing on the most impactful suppliers first. This strategic approach ensures efficient resource allocation and maximises the potential for emissions reductions.
- Tailored Strategies: Develop tailored engagement strategies for different supplier tiers, considering factors such as size, industry, and geographic location.
- Data-Driven Decision Making: Utilise data and analytics to track progress, identify opportunities for improvement, and measure the impact of your supplier engagement initiatives.
Assessing and Engaging Suppliers: A Key to Your Procurement Policy
To effectively reduce Scope 3 emissions, it’s crucial to assess your suppliers’ carbon maturity and alignment with your net-zero goals. By implementing a robust supplier scoring system, you can make informed, data-driven procurement decisions and foster long-lasting, sustainable partnerships.
Our corporate carbon maturity model provides a comprehensive framework for evaluating suppliers’ readiness for a net-zero future. This model assesses key factors such as governance, emissions measurement, net-zero planning, and the strength of their reduction initiatives.
City Science Corporate Carbon Maturity Model
While it’s essential to prioritise high-scoring suppliers, it’s equally important to engage with all suppliers, regardless of their initial performance. By sharing best practices, offering support, and setting clear expectations, organisations can drive positive change throughout their supply chains. Through collaborative partnerships, we can collectively accelerate the transition to a low-carbon economy.
Supplier assistance
Leading organisations are taking the initiative to support their suppliers in measuring, tracking, and reducing their emissions. This proactive approach not only enhances the accuracy of the organisation’s own Scope 3 emissions reporting but also strengthens long-term partnerships with suppliers.
By providing resources such as carbon literacy training or financial support for emissions reduction initiatives, organisations can empower their suppliers to take meaningful action. This collaborative approach benefits both parties, as it leads to improved supplier performance, reduced environmental impact, and enhanced supply chain resilience.
Supplier Transition: A Gradual Approach
To maintain a long-term trajectory toward net-zero, it’s essential to prioritise suppliers who align with your sustainability goals. While this may seem daunting, a phased approach can minimise disruptions and encourage positive change.
By setting realistic timelines and providing support, organisations can work with suppliers to improve their environmental performance. It’s important to avoid abrupt changes that could negatively impact the supply chain. Instead, a gradual transition, perhaps starting in 2030, allows suppliers ample time to measure, reduce, and ultimately eliminate their emissions.
Ultimately, the goal is to foster long-term partnerships with suppliers who are committed to sustainability. By providing assistance and guidance, organisations can help their suppliers become more sustainable and resilient, while also advancing their own net-zero ambitions.
In conclusion, achieving net-zero emissions requires a comprehensive approach that involves every aspect of an organisation’s operations, including its supply chain. By prioritising supplier engagement, data-driven decision-making, and collaborative partnerships, organisations can significantly reduce their Scope 3 emissions and contribute to a more sustainable future.
Are you ready to start your supply chain decarbonisation journey? Join our webinar on the 27th of Februay to learn more about how to measure and reduce your supply chain emissions.