Jamie Ganderton

02 July 2024
Topics in this article
  • Net Zero | Scope 3

Improving emissions visibility is crucial for organizations committed to reducing their Scope 3 greenhouse gas emissions, but it can be a daunting task as there is often little visibility into the indirect emissions that exist along the supply chain, particularly as organizations can have thousands of suppliers contributing to their current emissions. There is no uniform approach to starting on Scope 3 decarbonization, but for most, indirect emissions visibility and target setting feature prominently in early discussions. From the organizations participating in Proxima’s Scope 3 Maturity Benchmark, only around 14% of organizations have yet to set a target of some form. Of those 86% who have taken initial steps towards emissions reduction by setting emissions targets, there is a mix of comfort in their Scope 3 climate impact.

Emissions Visibility: A Foundation for Realistic Targets

Improving the visibility of current emissions is essential for creating realistic and achievable emission reduction targets. From our research, leading organizations have scored an average of 3.8 out of 5 in current emissions visibility, demonstrating that establishing a clear understanding of emissions is vital. It provides a baseline that shapes structural changes within the organization, like the development of a Net Zero Procurement Strategy. This foundation is crucial for aligning Sustainability Initiatives with broader Business Goals, ensuring an effective strategy for long-term success.

Utilizing the GHG Protocol Methodology

The Greenhouse Gas (GHG) Protocol methodology is designed to facilitate incremental improvements in emissions visibility. It offers a sliding scale of accuracy, from a spend-based methodology to a supplier activity-based methodology. This range enables organizations to make informed decisions even without perfect data. By starting with a spend-based approach, companies can begin to map out their carbon footprint and identify initial hotspots, gradually improving the accuracy of key focus areas over time.

Spend-Based Methodology

The spend-based methodology is an easier-to-implement approach that allows organizations to start their emissions tracking process by analyzing their supplier spend profile. This method provides a broad overview of the emissions associated with their supply chain, highlighting major contributors and areas that need more detailed analysis. Organizations using this method are making greater initial progress by not waiting for perfect data to begin their decarbonization journey.

Proxy Data

Proxy data is used in cases when supplier data is missing. Organizations use industry-average proxy data to fill gaps in calculations. This proxy data should come from reliable public sources like government or industry association statistics to ensure it is as accurate as possible. By leveraging proxy data, companies can maintain the momentum of their emissions-tracking and target-setting processes even when direct supplier data is unavailable. This method ensures that estimates remain grounded in credible information, allowing organizations to continue making informed decisions and refining their strategies as more precise data becomes available.

Supplier Activity-Based Methodology

As organizations advance in their emissions tracking efforts, they can transition to the supplier activity-based methodology. This approach requires more detailed data from suppliers but offers greater accuracy in emissions reporting. Organizations can refine their emissions calculations and develop more precise reduction strategies by engaging suppliers and gathering activity-specific data. This step enhances supply chain visibility, which is critical for managing upstream emissions effectively.

Product Level Data

Product level data, also known as cradle-to-gate data, is obtained directly from suppliers and is considered the most accurate form of data for improving visibility on Scope 3 greenhouse gas emissions. Engaging Tier 1 strategic suppliers, or those supplying goods and services with higher emissions, should be the top priority. According to sources such as the Carbon Trust, obtaining detailed product-level data enables organizations to understand better the specific emissions associated with each product in their supply chain. This granular level of detail allows companies to pinpoint emission hotspots and take targeted action to reduce their carbon footprint more effectively. By focusing on high-impact suppliers first, organizations can achieve more significant reductions in their supply chain emissions and enhance their overall sustainability efforts.

Incremental Improvements & Long-Term Success

Improving emissions visibility over time is not just about achieving immediate reductions. It’s about creating a sustainable framework that allows for continuous improvement and adaptation. By regularly tracking and updating their emissions data, organizations can stay on top of their environmental impacts and ensure they are making consistent progress against their targets. This ongoing process can have a positive impact, aligning sustainability initiatives with overall business goals and demonstrating a commitment to reducing carbon footprints.

Proxima’s Carbon Cube Methodology

Proxima’s Decarbonization-as-a-Service offering focuses on helping businesses reduce greenhouse gas emissions (CO2e) from their suppliers. As part of this service, we offer the ‘Carbon Cube,’ a first-stage spend and emissions indicator to start this journey. It provides initial visibility into greenhouse gas emissions (CO2e) from suppliers by translating spend data into emissions estimates. The process involves collecting, cleansing, and categorizing spend data, and applying emissions factors based on national indicators and the Greenhouse Gas Protocol to offer an initial assessment of supplier emissions. This fast assessment highlights key suppliers and procurement categories, helping to identify major indirect emissions sources and estimate the ‘costs of carbon’ within the supply chain. The Carbon Cube supports early Scope 3 discussions by offering quick, cost-effective insights that are more reliable than proxy data, enabling businesses to build the case for change and begin their decarbonization efforts.

Conclusion

Improving emissions visibility is a dynamic process that requires a combination of initial broad assessments and gradual refinement. By leveraging methodologies like the GHG Protocol and setting science-based targets, organizations can build a robust foundation for their decarbonization efforts. This approach helps in reducing carbon emissions and enhances transparency and accountability, fostering trust among stakeholders.

Setting Science-Based Targets

Alongside improving emissions visibility, setting science-based targets (SBTs) is a process organizations should follow in order to comply with Scope 3 decarbonization. SBTs provide a clear and measurable path for organizations to reduce their carbon emissions in line with the latest climate science. By committing to SBTs, companies can demonstrate their dedication to sustainability and align their goals with global efforts to limit warming to pre-industrial levels. For more detailed guidance on setting science-based targets, read our article on how to set a science-based target.

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