Brightest's Guide to Decreasing Your Company's Scope 3 Emissions

How to Reduce Your Company's Scope 3 Emissions

When a company measures its carbon footprint or greenhouse gas (GHG) emissions, they're typically divided into (a) operational or 'direct' emissions, such as fuel used by delivery vehicles owned by the business, and (b) value chain or 'indirect' emissions, like the carbon footprint of shipping or receiving raw materials from a supplier. In carbon accounting, these indirect emissions are called Scope 3 emissions. Reducing Scope 3 emissions is very important for companies who are working on improve their sustainablity, since research suggests 60-90% of a typical consumer products company's entire carbon footprint is related to Scope 3.

Scope 3 GHG Emissions Reduction Importance

Source: McKinsey

In sustainability measurement and carbon accounting, there are 15 specific categories or sources of Scope 3 emissions:

  1. Purchased goods and services
  2. Capital goods
  3. Fuel- and energy-related activities
  4. Transportation and distribution (upstream)
  5. Transportation and distribution (downstream)
  6. Waste generated in operations
  7. Business travel
  8. Employee commuting
  9. Leased assets (upstream)
  10. Leased assets (downstream)
  11. Processing of sold products
  12. Use of sold products
  13. End-of-life treatment of sold products
  14. Franchises
  15. Investments

In a recent study from Lloyds Bank and YouGov, 80% of businesses surveyed said they recognize the importance of being more sustainable. Worsening climate change, increasing environmental regulations, and strong customer demand for sustainable products and services are all big reasons why companies need to understand and take action and reduce their carbon footprint, particularly Scope 3 emissions.

So what are some of the best steps a business can take to reduce Scope 3 emissions?

Getting Ready to Reduce Your Company's Scope 3 Emissions

Carbon footprint reduction targets are one the best ways to focus and communicate your organization's attention on climate change and sustainability performance - both internally to your employees and externally to customers, investors, and other stakeholders. Carbon targets are clear, quantifiable goals and market signals that align your brand, business model, and sustainability strategy.

Typically, before you start reducing your Scope 3 emissions, it can be helpful to start by measuring them as an initial 'inventory'. That way you know the Scope 3 emissions baseline you're starting from, as well as the biggest emissionns sources to target, so you can assess what impact specific Scope 3 emissions reduction actions can have for your company's overall carbon footprint. This will usually be your most recently completed financial accounting year. If you don't feel comfortable counting carbon yourself and need an efficient or automated way to do this, our award-winning sustainability software can import your excel sheets, utility bills, and other data and instantly convert it into a carbon footprint.

Once you know your initial Scope 3 carbon footprint, you can start implementing improvements and measuring (or estimating) the reduction results.

Scope 3 Emissions Reduction

How to Reduce Your Company's Scope 3 Emissions

Like any other strategic initiative, focus on Scope 3 emissions reduction steps that are (1) high impact and (2) low cost and effort. When it comes to Scope 3 emissions, typically your largest opportunities for emissions reduction will be in three areas:

  1. Supply chain sourcing and transportation
  2. Customer delivery logistics, order fulfillment, product usage, and end-of-life waste
  3. Employee travel and commuting

In each of these three aspects of your business, always remember the classic sustainability advice: "Reduce, re-use, and recycle."

The "highest impact" steps will depend some on your industry, company size, and business model, but always be thinking about how your organization can use less resources, as well as re-use existing resources to reduce your Scope 3 emissions. Here, there are many best practices to follow:

  • Operational and logistics efficiency - Often, business efficiency and sustainability go hand-in-hand. Finding opportunities to make your operations and logistics more efficient is a great way to reduce Scope 3 emissions. Can you reduce transportation or shipping distances? Can goods travel via more eco-friendly methods? Can you introduce circular steps in your manufacturing process or supply chain to re-use raw materials, waste, water, and other outputs? Can you source more raw materials closer to where they're used or processed?
  • Electric or no-emissions vehicles - Are there opportunities to replace existing car or diesel vehicles with electric vehicles (EVs), scooters, bicycles, or some other form of lower-emissions transportation? Can these tactics by applied in your upstream or downstream supply chain(s) to reduce Scope 3 emissions?
  • Get smarter and more sustainable when it comes to employee business travel and commuting - Are employees traveling by carbon-intensive methods when they don't need to be? See if there are more carbon efficient policies and tactics your business can use to reduce unnecessary Scope 3 emissions from travel. Can airplane flights be replaced by train travel? Are there incentives for employees in more urban areas to bike, car pool, or use public transportation to get to work? Are there electric vehicle (EV) chargers near your office? Look for Scope 3 reduction opportunities across your company's policies, incentives, and infrastructure.
  • Sustainable suppliers - The less energy, raw materials, and resources your suppliers use, the lower your company's Scope 3 emissions will be. Remember, all of your supplier's emissions ultimately get included in your Scope 3 emissions. Try to shift more of your sourcing toward suppliers that are using renewable energy, have implemented more energy and resource-efficient manufacturing methods, and are conscious about the environmental impacts of their operations and supply chain
  • Sustainable materials - Sourcing a greater percentage of recycled, upcycled, and re-used raw materials for products and packaging is another impactful way to reduce your company's Scope 3 emissions. Similarly, producing high-quality products that have a longer lifespan also ultimately reduces their environmental impact by creating less waste and repeat consumption.
  • Recycling, composting, re-use, and take-back programs - Waste disposal, landfills, and incineration can be another significant source of Scope 3 emissions. What are steps and programs your organization can implement to reduce waste, help customers make more sustainable product usage decisions, and improve the circularity of your products?

Above all, focus on what matters most in terms of your company's overall Scope 3 emissions footprint. If you only focus on small, easy wins, they're unlikely to have a meaningful impact on your company's overall Scope 3 emissions.

Your Next Steps Reducing Your Company's Scope 3 Emissions

At a time in history where we need both governments and businesses to contribute to fighting climate change, reducing your organization's carbon footprint is an essential step to help secure a more sustainable, livable future for everyone. And, as always, if your organization is working towards decarbonizing and needs help with strategy, carbon accounting, sustainability measurement, forecasting, or anything else, please get in touch and we'll see if there are ways we can support you.