Gemma Thompson & Jamie Ganderton

14 June 2024
Topics in this article
  • Net Zero | Scope 3

Insights from the Scope 3 Maturity Benchmark

At the start of 2024, it was reported that the previous 12-month period was the warmest year in a series stretching back to 1850, where the global average temperature was 1.46°C above the pre-industrial baseline. This increase in temperature isn’t just a marginal rise; it’s about the growth in extreme weather events, which have a significant environmental impact, often devastating the environment and communities. According to ‘World Weather Attribution,’ recent extreme events would have been “virtually impossible” without human-caused change, much of which is due to greenhouse gas emissions. 

The Carbon Disclosure Project reports that over 80% of these global emissions come from “Scope 3,” namely the value chains associated with organizations, their customers, and supply chain partners. Scope 3 refers to indirect emissions that occur in a company’s value chain, including both upstream and downstream emissions. These emissions contribute significantly to a company’s carbon footprint. 

The Link between what businesses buy and emissions

We know by now that there is a binary link between what businesses buy, who they buy from, and the carbon emissions they generate. However, many businesses face huge cost pressures, which seem to temper action on Scope 3 despite the drip feed of tighter regulation encouraging disclosure and reduction in many parts of the world.

The evidence for this is part anecdotal, and part can be found in the plethora of headlines in 2023/24 whereby many large corporates seemingly downgraded their ambitions or reset them now better informed about how practically hard they would be to achieve. This narrative is supported by the data in The Scope 3 Benchmark, which shows that the gap between corporate ambition and practical steps to reduce emissions is wide, and dedicated investment in procurement capability is low.

ORGANIZATIONS ARE STUCK BETWEEN THE ‘WHAT’ & THE ‘HOW’

It seems simple—reduce supply chain emissions, and you reduce global emissions. However, most organizations seem to still be in the very early stages of maturity, stuck between the “what” and the “how.” Tackling Scope 3 emissions is a bigger problem than each of us—bigger than business and society. There is little justification to compete when we are all facing the same challenge, and the solution, in the near term at least, lies in clarity (on what to do) and collaboration with supply chain partners to get there.

Despite the headlines, momentum is building. Whether some targets are being pushed out or not, we have reached a tipping point in addressing the climate crisis.

  • Since the last edition of Proxima’s Scope 3 Benchmark report, an additional 5,000 organizations have disclosed emissions to the Carbon Disclosure Project. This now totals over 23,000 organizations, representing two-thirds of global market capitalization.
  • As of October 2023, 6,000 organizations have either set or committed to set carbon reduction targets in line with the Science Based Targets initiative. When comparing this figure to just 500 in 2018, it is clear that momentum is building, not falling away.

Whilst target setting signals intent, it does not guarantee a credible climate strategy. A recent report found that 93% of organizations with Net Zero targets by 2030 will fail to meet their targets unless they at least double the pace of reducing emissions. Indeed, some of the world’s largest organizations are among 239 companies that have had their net-zero science-based target “commitment removed” due to progress tracking behind an often-ambitious plan.

This does not mean that these businesses are not making progress; in many cases, they are leading the charge and have made more progress than others. But it does perhaps indicate that many of those leading the charge are now living the realities of hitting ambitious targets and that they must recalibrate as they go.

WHAT ARE THE FACTORS INHIBITING PROGRESS?

These realities that are inhibiting progress are likely multifaceted. More than ever, organizations are dealing with competing business challenges and priorities—some demanding attention so short-term that 2030 may fall into the important but not urgent pile—too far out to warrant the investment of resources much needed elsewhere now.

The effects of climate change are apparent, and the need for robust climate strategies and practical steps to address carbon emissions across entire supply chains is more pressing than ever. Collaboration among supply chain partners and a clear plan for emissions reduction are essential for tackling the climate crisis and making a significant environmental impact.

Download our latest report to continue reading about the progress we are collectively making and for practical steps that you can take to address your Scope 3 emissions.

Table: Trends in scope 3 emissions reductions and science-based targets

YearNumber of Organizations Disclosing EmissionsTotal Organizations with Science Based TargetsOrganizations with Approved Science Based TargetsPercentage of Global Market Capitalization Represented
20186,937515164NA
20198,361751315NA
20209,5261,10654620%
202113,1262,2531,08228%
202218,6364,2302,07934%
202323,2026,0004,20450%
Sources: https://sciencebasedtargets.org/reports/sbti-monitoring-report-2022, https://www.independent.co.uk/climate-change/news/bezos-earth-fund-royal-mail-vodafone-itv-tesco-b2488870.html.

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