10 Effective Strategies for Engaging Suppliers and Slashing Scope 3 Emissions
As a business owner, procurement manager or sustainability professional, reducing your organization’s carbon footprint is likely top of mind. But what about the emissions of your suppliers and contractors? And what about their suppliers and contractors?
Scope 3 emissions—indirect impacts that occur in the value chain of an organization, including those from suppliers, customers, and other stakeholders—are a critical but often overlooked environmental metric.
A recent report by the global non-profit organization CDP entitled “Scoping Out: Tracking Nature Across the Supply Chain,” found that while some companies have begun measuring their Scope 3 impacts relating to climate, other areas such as biodiversity, forests and water are not as closely scrutinized. In 2022, 18,600 organizations around the world shared environmental change data with CDP, but only 1,000 disclosed data relating to forests.
The report also noted that overall, Scope 3 impacts make up just 15 percent of sustainability targets, even though they account for 11.4 times a company’s direct emissions.
Often organizations are not aware of their impacts, but the following strategies can help you engage Scope 3 suppliers/contractors, and support them in identifying and calculating their climate, water, forests and biodiversity impacts.
Keep in mind that your organization may want to start engaging a small subset in these processes through a pilot initiative before rolling out the initiatives to a broader group.
1. Assess Early and Often
Only 41 percent of companies included in CDP’s survey reported emissions for at least one Scope 3 category. Supply chain mapping—tracking all suppliers, inputs and outputs of a product or service—can go a long way in helping your organization identify who is responsible for the bulk of the supply chain emissions. There is no shortage of technology available for this: as the number of climate reporting policies are being proposed and implemented increases, so do the advanced tools being released to help organizations accurately assess their impacts.
2. Set Targets
Only 46 percent of the 2022 CDP survey respondents reported having established Scope 3 targets. Once you have an understanding of the biggest contributors to your organization’s indirect upstream and downstream emissions, you can begin creating clear and ambitious sustainability objectives that align with your sustainability goals. These targets can then be communicated to Scope 3 groups, emphasizing the importance of reduction strategies—and encouraging their participation.
3. Educate
Your suppliers/contractors may not even be aware of their impacts, and if that’s the case, it’s in your organization’s best interest to inform them. The CDP report found that only 39 percent of the 7,304 company respondents engage their suppliers on climate-related issues. Begin working within your team to create a plan for educating your top producers about their environmental footprint, and the benefits of reducing it. This education can be done through newsletters, reports, webinars, training sessions, and other virtual or in-person channels.
4. Provide Tools
Once Scope 3 suppliers are aware of the ways in which their business activities are negatively affecting the planet, and likely their bottom line, you can begin sharing technical tools, guidance, information and resources for measurement and reporting. Whether you’re onboarding new contractors or transitioning existing suppliers onto your sustainability initiatives, make it part of your process to share carbon calculators or emissions data templates to help them track their impacts accurately, easily and efficiently.
5. Encourage Transparency
After a measurement and reporting process is in place, request that Scope 3 emitters regularly share data and information with your group. Your organization can support this process by developing a clear and concise emissions reporting framework for suppliers to follow. Hosting regular meetings or workshops to discuss their emissions data, identifying areas for improvement, and sharing best practices are also excellent ways to promote information-sharing.
6. Work Collaboratively
CDP’s 2022 survey found that just one in 10 of respondent companies engages with over half of their suppliers on the issue of environmental change. Invest the time and effort required to create a foundation of open communication with your suppliers and contractors, and let them know that your team is there to support them on their sustainability journey. Meet with representatives regularly to stay updated on their goals, pain points and challenges, and continuously explore different relevant sustainable options whether it be renewable energy or waste reduction.
7. Prioritize High-Impact Areas
Work with your suppliers and contractors to conduct a thorough analysis of their supply chain and identify areas that generate the most emissions. When exploring reduction solutions, look to indirect upstream impacts—transportation and distribution, leased assets and waste—as well as indirect downstream impacts—a products’ end-of-life treatment and how sold products are used, for instance. Once you have identified the top Scope 3 culprits, work with representatives to implement sustainable practices.
8. Monitor Progress
The tools and metrics you use to track scope 3 reduction progress will depend on the nature of your particular industry and business. For instance, your supplier sustainability rating system might measure emissions intensity or carbon footprint. Work closely with Scope 3 groups to monitor the impact of reduction solutions, but be patient and understand that implementing suggested practices and seeing results may take time.
9. Provide Incentives
Scope 3 reduction incentives are an effective way to encourage participation in sustainability programs. Your organization can start by developing a clear and concise rewards framework that outlines the incentives available for suppliers. CDP suggests offering policy incentives during procurement, for instance. Next, communicate the importance of emissions reduction and explain how participation will help reduce the overall carbon footprint of the supply chain, and likely the bottom line.
In terms of incentives, some companies offer financial rewards, such as bonuses, discounts or rebates, while others offer non-financial motivation such as preferential treatment or recognition, for suppliers who achieve their emissions reduction targets.
10. Celebrate Success
Celebrating wins in Scope 3 impact reductions, and communicating progress to stakeholders is an exciting and encouraging way to motivate further emissions reductions. CDP recommends publishing and celebrating achievements through internal and external awards. Sharing success stories on social media via a newsletter or a press release has the added bonus of inspiring other Scope 3 emitters to follow suit.
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Tags: scope 3 emissions, supply chain, procurement, indirect emissions, indirect impact, supplier, contractor