Scope 3 has, in recent years, become one of the most widely-discussed topics within business circles.
Found at the intersection of supply chain and sustainability, Scope 3 covers the greenhouse gas (GHG) emissions from upstream and downstream activities in a company’s value chain.
Unsurprisingly, conversation – and concern – has amplified as regulatory bodies consider implementing sweeping new rules and directives which would require organisations to report emissions falling into this classification.
It means the pressure is on businesses to ensure the end-of-end impact of their operations is being considered, measured and acted upon where environmental harm is being done.
Here, Supply Chain Digital takes a look at the Scope 3 strategies firms should consider in a bid to clean up their supply chains.
Prioritise suppliers based on climate strategy, performance and transparency
A lack of transparency creates all manner of challenges for stakeholders, partners and clients, while simultaneously complicating efforts for the sustainability teams responsible for developing and maintaining strategies.
It’s especially critical on the Scope 3 front, where accurate data from the supply chain is essential.
Professional services giant Accenture reports that “Scope 3 emission hot spots” frequently rear their heads in the downstream supply chain during raw material sourcing, presenting an opportunity for companies to leverage their financial influence to promote sustainability.
Make it mandatory for suppliers to commit to net zero
Imposing strict requirements on suppliers puts organisations in a position where they can leverage spending power – regardless of their size – to enforce sustainability strategies and reduce Scope 3 emissions.
NHS England, for example, considers emissions in its procurement decisions, thereby aligning suppliers with its net-zero goals. Similarly, British supermarket giant Tesco has pledged to achieve a net-zero supply chain by 2050 and is assisting all suppliers in setting their own targets in this area.
Enable the circular economy
The circular economy is defined by the European Parliament as a model of production and consumption which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products for as long as possible. In this way, the life cycle of products is extended.
According to McKinsey, adopting circular economy practices could enhance Europe’s resource productivity by 3% by 2030, while yielding up to £522bn (US$676bn) in annual savings.
Furthermore, it bolsters business resiliency, job creation and economic growth while providing environmental benefits such as reducing waste and greenhouse gas emissions.
Foster the creation of alternative value chains
Leading by example is, undoubtedly, crucial to the wider sustainability movement.
Sustainable decision-making sends a market signal throughout the supply chain, encouraging support for sustainable businesses.
What’s more, by developing low-emission processes, companies can assist other organisations when it comes to reducing their emissions.
Lower life cycle emissions
Offering products and services with reduced life cycle emissions can result in numerous benefits for both companies and the environment around them.
Every day, consumers are becoming more and more aware of life cycle impacts, to the extent that climate transparency has immense potential to drive sales.
Additionally, lower-emission products often cost less to produce, making it an obvious choice for reducing Scope 3 emissions.
Accelerate adoption of clean energy
This represents another opportunity to collaborate with the broader value chain.
Energy production accounts for more than two-thirds of global GHG emissions, so decarbonising the energy supply is essential for achieving net zero. While purchased energy falls under Scope 2 emissions, influencing a supplier’s energy usage can affect Scope 3.
Just some of the ways to achieve a positive impact in this area include taking out a corporate power purchase agreement (CPPA), investing in generation assets or signing new supplier contracts.
Business would be wise to research how their choices will impact the development of new renewable infrastructure.
Invest in GHG reduction and removal
Much of the world is working hard to achieve net zero, but significant environmental damage has already been done. It’s crucial, therefore, to not only reduce future emissions but also work on reducing and removing existing emissions.
This might involve backing technological advancements designed to absorb emissions, such as Microsoft’s investments in biochar and emerging solutions like direct air capture.
Align financial investments with climate strategy
By ensuring that financial investments, including assets and pension funds, align with sustainability strategies and commitments, organisations can decrease Scope 3 emissions by opting for more environmentally-friendly investments.
Newly-introduced regulations, such as the TCFD reporting requirements and the UK’s Sustainability Disclosure Requirements, mandate that larger businesses be transparent about their climate impact.
It's increasingly clear that financial allocation plays a crucial role in driving lower emissions.
Low or no-carbon travel
By minimising employee travel or leveraging urban planning and hybrid work technologies to ensure travelling for work is no longer a necessity, significant reductions in Scope 3 emissions can be achieved.
What makes this an attractive proposition is that it’s straightforward to both monitor and manage internally.
Moreover, promoting active travel offers myriad benefits to businesses. Studies have previously shown that employees who walk or cycle to work demonstrate higher productivity, while customers who cycle to stores typically spend more.
To get behind this, companies can offer incentives, install bicycle parking facilities and participate in local programmes.
Collaborate with partners and industry bodies
It seems obvious, but collaboration in business circles can often be deliberately overlooked in an attempt to avoid giving away strategies that could give rivals a competitive advantage.
However, the importance of protecting our planet surely dwarfs any desire to stay ahead of the competition.
Joining forces with other companies, industry bodies and members of the wider value chain to align procurement strategies and purchasing requirements can significantly enhance sustainability credentials.
By their very nature Scope 3 emissions are a by-product of partnerships, making collaborative efforts the natural path towards finding solutions.
Don't miss Procurement & Supply Chain LIVE: Scope 3
The important topic of supply chain sustainability will also feature heavily during Procurement & Supply Chain LIVE: Scope 3, which is being staged in parallel with Sustainability LIVE: Net Zero on 5-6 March 2025.
This inaugural event at the QEII Centre, London, will bring together audiences with an interest in the increasing interconnection between procurement, supply chain and sustainability, with two stages running simultaneously and various workshops covering a number of themes.
Attendees can enjoy everything which has made Sustainability LIVE one of the best new conferences, while also delving further into procurement and supply chain by exploring regulatory pressures, consumer demand for ethical sourcing and the financial benefits of sustainable practices.
Stay tuned to the Supply Chain Digital website to find out more about Procurement & Supply Chain LIVE: Scope 3 over the coming months.
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