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