How to Reduce Your Organisation’s Scope 3 Emissions

As global corporations grapple with climate change, the focus has shifted to Scope 3 emissions. These indirect emissions, occurring throughout a company's value chain, often account for the largest portion of a firm's carbon footprint. 

For many companies, Scope 3 emissions can represent up to 80% of their total carbon footprint. This makes them a critical target for reduction efforts.

For some sectors, Scope 3 emissions can be even higher. The Carbon Disclosure Project estimates that for companies in the financial services sector, Scope 3 emissions are 99.98% of their total emissions on average. 

Scope 3 emissions encompass everything from the production of purchased goods to the use of sold products. They present a significant challenge for businesses aiming to reduce their environmental impact.

"Reducing Scope 3 emissions is a key focus in our efforts to create a positive impact and reach climate neutrality by 2030," Jesper Brodin, Chief Executive Officer of IKEA, was quoted as saying in our sister title, Scope 3 Magazine. 

However, measuring and managing these emissions is complex. It involves gathering data from numerous suppliers and understanding the lifecycle of products.

Engaging suppliers

One key strategy for reducing Scope 3 emissions is engaging suppliers. This involves setting clear expectations and providing support for sustainability initiatives.

Companies are investing in supplier education and training programmes. These initiatives aim to build capacity for emissions reduction throughout the supply chain.

Some firms are integrating sustainability criteria into their procurement processes. This encourages suppliers to prioritise environmental performance in their operations.

“We work closely with our suppliers to improve their environmental performance," Mark Schneider, former Chief Executive Officer of Nestlé, told the UN Global Compact Network. "This includes setting targets and sharing best practices.”

Product innovation

Another approach to reducing Scope 3 emissions is through product innovation. This involves designing products with lower environmental impacts throughout their lifecycle.

Companies are exploring new materials, improving energy efficiency, and extending product lifespans. These efforts can significantly reduce emissions associated with product use and disposal.

“Businesses have a profound opportunity to help build a more sustainable future, one born of our common concern for the planet we share,” Tim Cook, Apple’s CEO, said back in 2020.

“The innovations powering our environmental journey are not only good for the planet — they’ve helped us make our products more energy efficient … climate action can be the foundation for a new era of innovative potential, job creation, and durable economic growth. With our commitment to carbon neutrality, we hope to be a ripple in the pond that creates a much larger change.”

Some firms are also exploring new business models, such as product-as-a-service offerings. These can extend product lifespans and reduce waste associated with traditional consumption patterns.

Transportation and logistics

Transportation is often a significant source of Scope 3 emissions. Companies are exploring various strategies to address this challenge.

Some are optimising their logistics networks to reduce transportation distances. Others are shifting to lower-emission modes of transport, such as rail or electric vehicles.

"We're investing in alternative fuels and more efficient transportation methods," BP CEO Bernard Looney told the World Economic Forum. "It's part of our broader strategy to reduce emissions across our value chain.”

Collaboration is key to addressing many Scope 3 challenges. Companies are partnering with suppliers, customers and even competitors to drive industry-wide change.

Industry initiatives and partnerships are emerging to tackle shared challenges. These collaborations can accelerate progress and drive innovation.

"Addressing Scope 3 emissions requires a collective effort," Brodin told podcaster Azeem Azhar. "By working together, we can create the systemic change needed to combat climate change."

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