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

A common challenge among all participating organizations of The Scope 3 Maturity Benchmark, no matter their organizational maturity or development stage in their Scope 3 journey, is defining the required funding and resources and then matching that investment with the path toward progress. There is a delicate balance to be made between investment that advances efforts but doesn’t significantly impact BAU, and making the case for change requires calculating the cost of doing nothing while still articulating the impact change can have.

The primary challenge is that Scope 3 progress is not savings-led, at least in the short term, nor FTE-led. The specifics to emphasize in the business case will depend on the organization, sector, and decision-maker’s personas. This will guide whether the framing is on the benefit or risk, numbers or vision.

There could be various lenses to look through: 

If you need to build a business case to secure funding and support, here are some of the questions and actions that you can use to build a framework:

What is the incoming cost of Carbon to your organization?

  • Assess whether inaction could lead to higher overall costs due to carbon levies or taxes.
  • Conduct a Footprint Assessment and multiply by the assumptive cost of carbon to estimate potential additional costs.
  • Evaluate the possibility of an increase in the total cost of your product or service as a result of carbon expenses.

Assess the impact on Sales/Revenue

  • Assess the competitive disadvantage in buying decisions due to a lower ‘green score.’
  • Estimate at-risk revenue by considering the potential loss of business to more eco-friendly competitors.
  • Calculate the cost of improvement to enhance the ‘green score’ and align with industry standards.
  • Consider the correlation between lower revenue/win rates and a lower ‘green scoring’ among consumers who prioritize environmental factors.

Consider Regulatory Compliance Implications

  • Assess whether there is a risk of non-compliance with regulations both at home and in other key territories.
  • Conduct a thorough review of upcoming regulations across your business and value chain.
  • Understand that non-compliance can result in financial penalties (such as fines) or other forms of economic and reputational damage.

Look Beyond Cost With an Economic Lens

  • Consider whether a higher ESG (Environmental, Social, and Governance) score positively influences your financing options.
  • Evaluate how your ESG performance affects your access to capital and financing terms.
  • Recognize that companies with superior ESG performance may gain advantages in terms of financing terms.
  • Conversely, those with lower ESG scores may miss out on these favorable financing terms.

Employee Engagement

  • Consider how your ESG (Environmental, Social, and Governance) performance affects your current and future employees.
  • Recognize that a strong ESG profile can positively influence employee engagement and satisfaction.
  • Develop a comprehensive engagement plan that aligns with your ESG goals.
  • Support this plan with effective internal and external communications to keep employees informed and engaged.
  • Understand that companies with better ESG stories may have an advantage in recruitment and retention.
  • Be prepared for the possibility that peers with superior ESG performance might find attracting and retaining talent easier.

Shareholder Satisfaction

  • Explore whether, in your organization, better ESG performance correlates with greater shareholder returns.
  • Consider how sustainable practices impact long-term financial gains.
  • Explore how to integrate ESG Goals into your Operating Model:
    • Leverage ESG principles to drive continuous improvement across the organization.
  • Navigating Activist Shareholder Disruption:
    • Be prepared for activist shareholders advocating for change.
    • Implement strategic shifts aligned with ESG priorities while maintaining board confidence.

You can also assess your current levels of maturity by participating in The Scope 3 Maturity Benchmark, which is a collaborative program that assesses your investment, headcount, and current actions against 170+ of your peers.

The report’s outputs will provide data and actions to accelerate and ensure faster and more certain progress towards tackling Scope 3.

Scope 3 Maturity Benchmark Report 2024

Download the latest findings

Read More

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