SUSTAINABILITY SPOTLIGHT | 40 SUSTAINABILITY SPOTLIGHT | 41 How are companies reducing Scope 3 A practical roadmap for businesses emissions today? There is no shortage of challenges in reducing Scope 3 Organisations around the world are implementing a emissions, and both SMEs and industry giants struggle range of approaches and actions to reduce their Scope to navigate the complexities involved in this task. 3 emissions. Table 1 (below) shows selected examples of actions to reduce Scope 3 emissions, as suggested in However, through extensive research and consultations the GHG Protocol Scope 3 Standard: with industry leaders and academic experts, the World Economic Forum’s Industry Net Zero Accelerator initiative identified 12 opportunity areas to help Table 1. companies in their decarbonisation journey, and these, Other CCF standards include the EU Organisation The EU Corporate Sustainability Reporting Directive grouped into four action levels, Scope 3 category Examples of actions to reduce Scope 3 emissions inform strategic decisions. Environmental Footprint (OEF), as well as the (CSRD) is a pivotal European Union directive aiming 1. Purchased goods – Replace high-GHG-emitting raw materials with low-GHG-emitting ones Global Reporting Initiative (GRI) and Department for to standardise sustainability reporting practices and services – Implement low-GHG procurement/purchasing policies, possibly using the total sustainable cost of ownership Environment, Food & Rural Aairs (Defra) guidance among large companies and listed small and (TSCO) as a weighted objective Details of these opportunities can – Encourage Tier 1 suppliers to engage the reporting company’s Tier 2 suppliers, and disclose these Scope 3 (UK). Additional PCF standards include the EU Product medium enterprises (SMEs) operating within the EU. emissions to the customer in order to propagate GHG reporting throughout the supply chain be found in the White Paper The Environmental Footprint (PEF), BP X30–323 in France, It significantly expands the scope of reporting by 2. Capital goods– Replace high-GHG-emitting capital goods with low-GHG-emitting ones“No-Excuse” Opportunities to Tackle and Publicly Available Specification (PAS) 2050.requiring companies to disclose detailed information 3. Fuel- and energy-– Reduce energy consumption Scope 3 Emissions in Manufacturing related activities (not included in Scope 1 – Shift towards lower-emitting fuel/energy sources and Value Chains, which serves as on environmental and social matters, including Scope 3 or Scope 2) – Generate energy onsite using renewable sources To estimate emissions, companies use formulas to emissions. This directive came into force on 5 January a practical roadmap for businesses 4. Upstream – Reduce distance between supplier and customer transportation and navigating the intricate terrain multiply the volume of their activities (e.g. purchased 2023, with the first companies having to apply the new distribution – Source materials locally materials, transport) with emission factors (EF), which rules for the first time in the 2024 financial year, for – Optimize efficiency of transportation and distribution of Scope 3 decarbonisation and – Replace higher-emitting transportation modes (e.g. air transport) with lower-emitting modes (e.g. marine accelerating their contributions to are representative values that attempt to relate the reports to be published in 2025.transport) quantity of a pollutant released into the atmosphere – Shift towards lower-emitting fuel sources global climate eorts. with the activity releasing the pollutant. Finding the The International Sustainability Standards Board (ISSB) 5. Waste generated in – Reduce quantity of waste generated in operations operations right EF is not an easy task because it is necessary is a standard-setting body under the International – Implement recycling measures – Implement lower-emitting waste treatment methods to ensure its geographic relevance and its scale of Financial Reporting Standards (IFRS) Foundation, The World Economic Forum’s Industry Net 6. Business travel – Reduce the amount of business travel and favour online meetings application (national/regional or site-specific), and whose mandate is the creation and development of Zero Accelerator Initiative – Encourage more efficient and lower-emitting modes of travel that it is well documented. Several public and private sustainability-related financial reporting standards 7. Employee – Create disincentives for commuting by car (e.g. parking policies) This article draws from the White Paper ‘The commuting “No-Excuse” Opportunities to Tackle Scope 3 EF databases exist and should be selected depending to meet investors’ needs for sustainability reporting. – Introduce incentives for use of public transport, cycling, car-pooling, etc. Emissions in Manufacturing and Value Chains’, on their application, as they use either generic or The ISSB’s work is underway to develop sustainability – Implement teleworking/telecommuting programmes published by the World Economic Forum’s geographic/sector-driven emissions estimates.disclosure standards, including on Scope 3 GHG – Reduce number of days worked per week Industry Net Zero Accelerator Initiative and co- 8. Upstream leased – Increase energy efficiency of operations authored by CIIP’s David Leal-Ayala. Examples of recognised EF databases include:emissions, backed by the G7, the G20, the International assets – Shift towards lower-emitting fuel sources GHG Protocol emissions factors databasesOrganization of Securities Commissions (IOSCO), the The White Paper is part of a series of activities 9. Downstream – Reduce distance between supplier and customer aimed at helping businesses collaborate and transportation and Intergovernmental Panel on Climate Change (IPCC) Financial Stability Board, African Finance Ministers distribution of sold – Optimize efficiency of transportation and distribution speed up the change across industrial sectors. products Emission Factor Database (EFDB)and Central Bank Governors from more than 40 – Replace higher-emitting transportation modes (e.g. air transport) with lower-emitting modes It highlights emerging opportunities and best (e.g. marine transport) practices to inspire leaders in both private and Institute for Global Environmental Strategies (IGES) List jurisdictions. Although not mandatory, the new – Shift towards lower-emitting fuel sources public sectors to take action and drive the of Grid Emission FactorsISSB standard aims to significantly improve carbon net-zero transformation of global supply chains 10. Processing of sold – Improve efficiency of processing without any excuses. World Resources Institute (WRI) and World Business accounting harmonisation – including sectoral specifics products – Redesign products to reduce processing required Council for Sustainable Development (WBCSD) – to allow investors to make more informed green – Use lower-GHG energy sources The World Economic Forum launched the Industry Net Zero Accelerator initiative in Greenhouse Gas Protocol Calculation Toolsfunding decisions.11. Use of sold – Develop new low- or zero-emitting products products 2022 in partnership with knowledge partners US EPA Air Pollutant Emission Factors AP-42 – Life-– Increase the energy efficiency of energy-consuming goods or eliminate the need for energy use Cambridge Industrial Innovation Policy and cycle databases (e.g. ecoinvent).Both these initiatives underscore the growing – Shift away from products that contain or emit GHGs Capgemini, Rockwell Automation, and Siemens. – Reduce the quantity of GHGs contained/released by products It also involves a community of over 30 global importance of holistic, comparable and auditable – Decrease the use-phase GHG intensity of the reporting company’s entire product portfolio manufacturing companies to help accelerate the Why must companies measure Scope 3 reporting to drive sustainability eorts and meet the – Change user instructions to promote the efficient use of products industry’s transition to net zero. The initiative 12. End-of-life – Make products recyclable and implement recycling measures that lead to net GHG reductions provides a platform for a growing community emissions?increasing demand for transparency in the business treatment of sold of industry leaders, technology providers, and products – Implement product packaging measures that generate net GHG reductions world. academic experts to encourage knowledge Although current Scope 3 standards push for voluntary – Improve traceability of products to optimize their use and maximize recycling sharing and actionable solutions towards 13. Downstream – Increase the energy efficiency of operations achieving net zero. disclosure, this might change, as governments and leased assets – Shift towards lower-emitting fuel sources organisations are increasingly pushing for mandatory 14. Franchises – Increase the energy efficiency of operations disclosure as a basis for climate action planning. Scope – Shift towards lower-emitting fuel sources Download the 3 reporting has garnered increasing significance in light 15. Investments– Invest in lower-emitting investments, technologies and projects White Paper: of new regulations, such as the following:Source: The GHG Protocol, Corporate Value Chain (Scope 3) Accounting and Reporting Standard, 2011