A global weather report from the Guardian on US data shows that the levels of greenhouse gases (GHGs) in the atmosphere are now alarmingly high. Compared to the pre-industrial era, atmospheric carbon dioxide levels are 50% higher and atmospheric methane levels have grown by 2.5 times. Countries, the world over are grappling with this looming challenge and its impact.
The International Monetary Fund (IMF) reports that although greenhouse gas emissions dipped by 4.6% in 2020 due to pandemic-driven lockdowns, they shot up to 6.4% in 2021 as economic activity resumed. In other news, GHG emissions could hit an alarmingly high new record by the end of 2023.
Tracking, measuring and managing GHG emissions is the key to protecting our planet and controlling the drastic effects of climate change. The GHG protocol offers guidelines and standard global frameworks to track GHG emissions across three categories: Scope 1, 2 and Scope 3 emissions.
An Introduction to Scope 3 Emissions
While Scope 1 covers direct emissions from an organisation's operations and Scope 2 covers indirect emissions like those from the purchase of energy and electricity, Scope 3 emissions are about the indirect emissions from the entire supply chain of an enterprise - both upstream and downstream. A recent report from EPA revealed the contribution to GHGs as 21% by industrial activities and 14% by transportation. This is a major area where enterprises can make a difference by addressing Scope 3.
Large companies partner with various SMBs across their supply chain, making Scope 3 emission management crucial. The details of emissions from the enterprise supply chain activities can be varied and diverse, making it a daunting task for the supply chain managers and sustainability officers to work out actionable solutions. This can be done better by understanding the 15 categories of emissions in Scope 3, to help identify the different upstream and downstream emission sources relevant to the particular enterprise and industry.
Challenges in Calculating the Scope 3 Emissions
Large enterprises shoulder a significant part of the collective responsibility to reduce GHG emissions.
Here are the four major challenges that enterprises can target to identify their GHG-related pain points:
Challenge 1: Data Collection and Reporting
Large enterprises need dynamic real-time data collection from their suppliers. While the larger suppliers might be able to provide visibility into their emissions data, the smaller suppliers are not equipped to track and report their emissions
Challenge 2: Selecting Suitable Scope 3 Modelling Techniques
Choosing the appropriate model to tackle Scope 3 emissions is the first impactful decision that needs attention. The most common modelling methods that enterprises adopt are - the spend-based method, average data method, hybrid method and supplier-specific method.
Choosing the right one makes a difference. However, while modelling emissions data might help enterprises gain visibility, supply chain managers should always keep an eye on practical actionable solutions to reduce GHG emissions leveraging their domain knowledge and the help of ESG experts.
Challenge 3: Extrapolating Results Across the Supply Chain
To bridge the gaps in data availability across the supply chain, enterprises often extrapolate the results obtained from a small sample size of suppliers.
However, this would need statistical expertise and the use of correct techniques. If not done correctly, it could lead to unreliable projections, incorrect business decisions, and loss of trust with the investors, and could eventually spiral down to the reputation of the enterprise.
Challenge 4: Inadequate Internal Processes
Even with the support of tools and techniques to manage the data, some large enterprises will continue to need help to monitor their Scope 3 emissions effectively. To minimise Scope 3 emissions, enterprises must establish proper internal processes and use frameworks such as CDP and ECOvadis, to evaluate progress on improving performance.
At Treeni, we provide comprehensive support in managing both upstream and downstream Scope 3 emissions via two primary efforts:
● Data and Emissions management
● Managed services
Data Management on resustain™
1. Data consistency & integration
● Integration with various Lines of Business applications, stakeholders, remote data and multiple sources and formats
● Goals & target setting and performance monitoring across the value chain
● Data-driven insights assist in informed decision-making and linkage of KPIs with multiple disclosure standards & frameworks
● Easy access to data at a granular level for benchmarking and governance and scenario analysis
2. Emission management
● Our emissions factor library helps you configure all emissions-related activities, their sources and the insights on Scope 3
emissions by identification and estimation of GHG emissions
Treeni’s Managed services for Suppliers’ Sustainability Performance Management involves the use of resustain™ to address the limitations of skills, bandwidth and budgets with an affordable managed service support desk, and includes:
● Data collection from SMB Suppliers, data review and cleaning
● Data upload to resustain™
● Track Supplier Data and carry out supplier assessments
● Map goals and targets
● Analyze the data to map with the set goals and targets
We further help you use the derived results and reports for disclosures and compliance, engaging suppliers, creating transparency, and pushing the ecosystem to deliver better emission management.
Supply chains have a significant impact on a company's emissions. By implementing comprehensive tracking and monitoring of Scope 3 emissions, companies can identify opportunities to reduce their environmental impact and business risks, increase efficiency, achieve long-term goals & targets and enhance their reputation. Technology can play a significant role in this task by providing several solutions to tackle the challenges of tracking and monitoring Scope 3 emissions, making them a great option for companies looking to improve their sustainability performance.
Treeni’s resustain™ SMB can be pivotal in facilitating this transformation. This cloud-based SaaS platform streamlines ESG reporting for small and medium-sized businesses. With templatized reporting, quick deployment and a zero-touch, zero-code, zero-deployment fee model, this platform can help large corporations efficiently manage and report GHG emissions data for all their upstream and downstream activities and thus manage their Scope 3 challenges and achieve goals.