Discussion Highlights on Corporate Environmental Objectives
In a concerted effort to reduce their environmental impact, companies across various sectors are taking proactive steps to address Scope 3 emissions. These indirect emissions, which often account for the majority of a company's greenhouse gas (GHG) emissions, are produced by assets not controlled by the company.
One key strategy is materiality mapping, a process that helps identify the highest emission sources within the value chain and prioritise efforts accordingly. This approach is being adopted by numerous companies, including Microsoft, which is encouraging its high-volume suppliers to switch to 100% clean electricity by 2030 and supports new low-carbon technologies such as concrete and steel.
Another strategy is supplier engagement and innovation partnerships. By encouraging suppliers to adopt renewable energy, improve efficiency, and shift to low-carbon materials, companies can significantly reduce their emissions. Microsoft's initiatives are just one example of this approach.
Circular business models are also being embraced, with product-as-a-service or subscription systems being implemented to extend product use, reduce waste, and lower emissions downstream. This shift is evident in the efforts of large brands like NIKE, which are reducing supply chain emissions by partnering with suppliers to transition to renewable energy, minimise air freight, and scale sustainable fuels.
Transport and distribution optimization is another crucial aspect of Scope 3 emission reduction. Companies are cooperating with contractors to reduce emissions from logistics and delivery, a move that can lead to significant financial benefits due to reduced production and freight costs.
Purchasing tiered carbon credits is another approach being used. These credits, aligned with the level of control companies have over emissions, can help offset a company's carbon footprint. High-control emissions with long-term removal credits, medium-control emissions with sequestration projects, and low-control emissions with avoidance credits (like cleaner cookstoves or refrigerant destruction) are all being utilised.
Sustainability organizations play a key role in this process. They set standards, facilitate collaboration, provide guidance on best practices, and enable financing solutions for decarbonization. The World Economic Forum, for instance, facilitates industry collaboration, knowledge sharing, and the development of frameworks for net-zero alignment and portfolio decarbonization. Financial institutions also support these efforts by aligning lending portfolios with climate goals, providing advisory services, and creating incentives for emissions reductions in supplier and customer networks.
The benefits of these efforts extend beyond environmental impact. Companies can financially benefit from emission reduction as their supply chains become more efficient. Moreover, staying silent on environmental policies can pose a reputational risk.
Examples of companies leading the way include NIKE, Walmart, Shure, and M. Holland. NIKE, for instance, is setting science-based targets and reducing supply chain emissions, while Walmart aims to remove a gigaton of waste from its supply chain by 2023. Shure has made improvements in its packaging, with all new products to be packaged with 75% recycled and/or renewable materials. M. Holland conducted an internal assessment on its U.S. fleet emissions in 2022 to understand the ecological impact and set goals to mitigate the fleet's carbon footprint.
In conclusion, effective Scope 3 reductions require cross-sector cooperation, innovation, strategic financing, and credible carbon management, all supported by sustainability standards and collaborative platforms. Companies that embrace these strategies not only reduce their environmental impact but also position themselves for financial growth and a strong reputation.
- In addition to materiality mapping and supplier engagement, companies are also adopting circular business models, which involve product-as-a-service or subscription systems to reduce waste and lower emissions.
- Financial benefits can be gained by optimizing transport and distribution, as companies collaborate with contractors to reduce emissions from logistics and delivery, decreasing production and freight costs.
- Purchasing tiered carbon credits is another strategy used by companies to offset their carbon footprint, with credits aligned with the level of control companies have over emissions, such as long-term removal credits, sequestration projects, and avoidance credits like cleaner cookstoves or refrigerant destruction.
