Big Businesses’ Scope 3 emissions are forcing suppliers to adjust their climate strategies
Building a sustainable future is a collaborative venture. As more businesses begin to aggressively reduce their total carbon emissions, they are finding that on average, around 75% of a company's emissions come from Scope 3. Working with suppliers represents the biggest opportunity for action and investment toward reaching net zero goals.
Scope 3 emissions cover upstream and downstream value chain emissions. This encompasses, among other things, procured products, transport of supplies, business travel, transport of products, usage of sold products and product disposal. For large companies, direct emissions contained under Scopes 1 and 2 are easier to track, control and measure. But getting suppliers on board to reduce Scope 3 is critically important.
Some giant companies like Amazon and SAP are taking charge by insisting their suppliers commit to net-zero goals. Amazon has updated its supply chain standards to require suppliers to share carbon emissions data, which includes setting goals and reducing emissions. At SAP, the company is requiring the top 100 key suppliers in their upstream supply chain to reduce greenhouse gas emissions by 2024.
Many small and medium-sized enterprises (SMEs) are suppliers to larger businesses that, like Amazon and SAP, are beginning to ask to see their climate action plans. So now is the time to embrace sustainability and align with these environmental initiatives to remain competitive, build resilience and contribute to a greener future. Here are some steps that SMEs can take to be ready to respond to their customers’ inquiries.
1. Assess and measure emissions. Conduct a comprehensive assessment of your carbon footprint. Understanding baseline emissions is an essential first step to setting realistic reduction targets and tracking progress. Over time, creating a data management system will be critical in reporting accurate and transparent information in compliance with industry standard frameworks. 2. Engage your suppliers. Being proactive in engaging with suppliers can help set common emission reduction goals and share best practices. A strong partnership can lead to mutual benefits and more sustainable supply chains.
2. Engage your suppliers. Being proactive in engaging with suppliers can help set common emission reduction goals and share best practices. A strong partnership can lead to mutual benefits and more sustainable supply chains.
3. Make relevant investments. Implement energy-efficient technologies, including energy-saving equipment, renewable energy adoption, waste reduction strategies and water conservation efforts. These steps help reduce emissions in the near-term, and can lead to long-term cost savings.
4. Engage employees. Your employees are your first-line advocates and influencers for your organization. Ensure that they are aware of the company’s climate/carbon goals, and how they can contribute to fostering a stronger and shared commitment to environmental responsibility within the organization.
5. Involve customers. According to the World Economic Forum, 50% of consumers are willing to pay more for products that are sustainably produced. Engaging with your customers about their sustainability expectations can help you align your practices to meet that demand as many become more conscious of environmental issues and the companies and products that they are willing to support.
6. Stay informed and adapt. With changing regulations, shifting industry trends, and constantly emerging sustainability practices and green technologies, every company must make a dedicated effort to learn and grow in order to remain competitive.
If your company is feeling the pressure and you aren’t sure where to begin, now is the time to start your climate journey and help your company meet coming standards. The University of Colorado’s Leeds School of Business offers the Climate Action for Business program, a two half-day business executive education course delivered via Zoom that teaches cutting-edge skills and perspectives needed to develop and lead your climate action plan. Participants earn a digital badge. Reserve your spot for the session on August 22-23.