Curbing carbon emissions in company value chains

Most of the world’s largest companies account and report on emissions from their direct operations, but there is still a significant gap in accounting for emissions along their value chain. These are called Scope 3 emissions and often represent the biggest share of a company’s greenhouse gas impacts, in some cases up to 70 per cent. Methods to curb them was a central topic of debate at this year’s Climate Innovation Summit in Dublin.

Interventions on company greenhouse gas emissions have widely become embedded into corporate practices by addressing emissions related directly to their operations and energy use. This is called Scope 1 and Scope 2 emissions. However, consulting firms aside, most major companies have the largest share of emissions embedded in their value chains. This encompasses emissions not directly associated with its operational activities, for instance, purchased goods and services, waste generation, investments and choice of technologies. These areas are collectively defined as Scope 3 emissions and finding methods of intervention poses a significant challenge for companies.

Many businesses lose oversight when they move beyond their first tier of suppliers and they find it difficult to compare one supply chain with the other – and hence very difficult to calculate the associated environmental impact. Being unable to measure and quantify their emissions hinders their ability to set targets as they do not have a baseline to compare them against.

As described by Owen Hewlett, Chief Technical Officer, Gold Standard: “Scope 3 has been the forgotten man of climate accounting.” This is despite the fact that value chain emissions account for up to 70 per cent of a company’s greenhouse gas emissions.

Finding means of intervention was precisely the focus of the breakout session at this year’s Climate Innovation Summit in Dublin. “It’s a vast amount of emissions that we are talking about, which provides a vast amount of opportunity,” Hewlett continued.

A lot can be done to incentivise companies to work more broadly with their supply chain. By investigating best practice interventions from successful case studies on Scope 3 reporting, five main themes were identified as viable pathways to curb emissions in company value chains:

  • Supplier engagement/procurement: Using the power of procurement to change the actions of company suppliers. For example, CDP works with key suppliers to help them set targets and monitor emissions over time. This has saved approximately 150 million tonnes of CO2 in the upstream supply chain of their suppliers.
  • Product service design: Design choices ultimately determine the product’s lifecycle emissions, which is based on the choice of materials used for their products. Designing products with longer lifespans and more sustainable materials can help offset emissions in value chains.
  • Operational practices: This is an internal perspective for the company, which includes biking to work in terms of employee commuting and using teleconferences to offset emissions from business travel.
  • Business model innovation: Enforcing business models that move away from evermore production and realigning incentives between producers and consumers that move away from more and more consumption.
  • Customer engagement: Affecting the way that customers actually use their products. This includes nudging and gamification as a means to influence customers in order to make them use their products more efficiently.

Areas of significant impact include accounting for land use change in corporate supply chains and deforestation related commodities which have high risk and impact. In an EIT Climate-KIC context, current projects for Scope 3 reporting with our partners include:

  • Gold Standard: The ‘Value Chains Interventions Guidance’, which is focused on Soil Organic Carbon Reporting.
  • Quantis: A commodity monitoring tool that determines the spatially-sensitive geo-footprint of mayor commodities by converging Life Cycle Assessment datasets with spatial data from Geographic Information Systems.
  • Quantis: A Redchain project that aims to reduce inconsistencies and improve transparency for REDD+ projects using a blockchain solution. 

With the carbon costs of travel in mind, Climate Innovation Summit session summaries are available online for those who cannot attend—and for review for those present. These summaries aim to extract the key debates, dialogues, and learnings from each #MissionFinance session.

 
Location
Ireland
Related Goal
Goal 8: Reduce industry emissions
Articles you may be interested in
In The News
City Finance Lab explores new advisory services to catalyse investment in sust...

With the carbon costs of travel in mind, Climate...

City Finance Lab explores new advisory services to catalyse investment in sustainable cities
In The News
EIT Climate-KIC responds to consultation on Long-Term Strategy for EU GHG emis...

As an active member of the community working to...

EIT Climate-KIC responds to consultation on Long-Term Strategy for EU GHG emissions reduction
Opinion
Distributed ledger technologies are here to stay
Dr. Harald Rauter Regional Innovation Lead, Climate-KIC
Distributed ledger technologies are here to stay
In The News
Search for 100 1.5C-compatible investments launched

The EU-backed Mission Innovation initiative has launched a framework...

Search for 100 1.5C-compatible investments launched
In The News
Debate: Can self-reporting be effective for investors?

Most climate and ESG data is self-reported – can...

Debate: Can self-reporting be effective for investors?
In The News
Risky business: Why 1.5C-aligned strategies are key to preserving capital

Decision-makers with responsibility for capital need to make bold,...

Risky business: Why 1.5C-aligned strategies are key to preserving capital
In The News
No alternative: Making sustainable infrastructure the only option

Only a fraction of global climate finance is reaching...

No alternative: Making sustainable infrastructure the only option
In The News
We’ve seen it with GDPR and data protection—could ambitious financial ...

With the carbon costs of travel in mind, Climate...

We’ve seen it with GDPR and data protection—could ambitious financial regulation be a key driver of climate action?
In The News
Bridging the climate adaptation investment gap

Financing climate adaptation took centre-stage at Day 2 of...

Bridging the climate adaptation investment gap
In Detail
Techno-economic assessment and life cycle assessment guidelines for CO2 util...

CO2 utilisation technologies, also known as carbon capture and utilisation (CCU) or CO2 re-use, capture CO2 and convert it into new products or services....

Techno-economic assessment and life cycle assessment guidelines for CO2 utilisation
In The News
Re-Industrialise launches at the European Week of Cities and Regions

EIT Climate-KIC and partners recently launched the Re-Industrialise programme,...

Re-Industrialise launches at the European Week of Cities and Regions
In Detail
Reframing our current approach to urban transformations

EIT Climate-KIC gathered the outputs and lessons-learned from an urban transformations community workshop in Malaga, which saw more than 100 city leaders and teams...

Reframing our current approach to urban transformations
Opinion
Reframing perspectives on climate change
Reframing perspectives on climate change
Opinion
Only 20 companies in the world provide 100 per cent greenhouse gas emissions disclosure – Are ...
Only 20 companies in the world provide 100 per cent greenhouse gas emissions disclosure – Are investors in the dark on climate risks?
In The News
Gaining a better understanding of climate risk

The roadblocks that stand in the way of companies...

Gaining a better understanding of climate risk
In The News
The power of persuasion: Great Debate changes audience’s mind on self-re...

With the carbon costs of travel in mind, Climate...

The power of persuasion: Great Debate changes audience’s mind on self-reporting
In The News
Climate Innovation Summit: a masterclass on climate-related financial disclosu...

If we want to keep on track with the...

Climate Innovation Summit: a masterclass on climate-related financial disclosure
In The News
Transforming financial sector’s core value system may be essential to 1.5C

With the carbon costs of travel in mind, Climate...

Transforming financial sector’s core value system may be essential to 1.5C
In The News
One hundred 1.5C compatible investments by 2030

New investor framework launched today at European Climate Innovation...

One hundred 1.5C compatible investments by 2030
In The News
‘Fearless Girl’ appears at EIT Climate-KIC’s Climate Innovation Summit

Fearless Girl—the famous bronze statue erected in Lower Manhattan...

‘Fearless Girl’ appears at EIT Climate-KIC’s Climate Innovation Summit
In our community
Interview with Leeor Groen, Venture Manager, Blockchain Valley Ventures
Interview with Leeor Groen, Venture Manager, Blockchain Valley Ventures
In The News
EIT Climate-KIC partners with South Pole for Climate Innovation Summit carbon ...

EIT Climate-KIC’s Climate Innovation Summit (CIS) will feature a...

EIT Climate-KIC partners with South Pole for Climate Innovation Summit carbon offsetting programme
In The News
Financing tomorrow’s new normal today

First published in Environmental Finance as part of a joint...

Financing tomorrow’s new normal today
In The News
Climathon 2018 will be the biggest global climate hackathon in history

Over 100 cities from around the world will join...

Climathon 2018 will be the biggest global climate hackathon in history
Opinion
How can we mainstream major climate risks into financial reporting?
Hanna Värttö Senior Consultant, South Pole Group
How can we mainstream major climate risks into financial reporting?
In The News
EIT Climate-KIC emphasises need for climate focus in cohesion policy at Europe...

EIT Climate-KIC was among the urban planners, municipalities, policy...

EIT Climate-KIC emphasises need for climate focus in cohesion policy at European Week of Cities and Regions
In The News
EIT Climate-KIC’s secrets for successfully running accelerators revealed...

EIT Climate-KIC has been featured in “Accelerate This!”, a...

EIT Climate-KIC’s secrets for successfully running accelerators revealed in “Accelerate This!”
Opinion
Harvesting the intelligence of photosynthetic microalgae to de-carbonise future cities
Marco Poletto Co-founder and Director, ecoLogicStudio
Harvesting the intelligence of photosynthetic microalgae to de-carbonise future cities
In our community
Interview with Mariana Mazzucato, Professor, Economics of Innovation and Pub...
Interview with Mariana Mazzucato, Professor, Economics of Innovation and Public Value, UCL
In The News
Why we invest in sustainable start-ups

A growing number of investors recognise the value in...

Why we invest in sustainable start-ups