Reducing Scope 3 Emissions: Purchased Goods & Services and Capital Goods

A summary of the key takeaways from a recent webinar on reducing scope 3 Purchased Goods & Services and Capital Goods emissions.

Shoosmiths is delighted to be sponsoring United Nation Global Compact Network (UNGC) UK’s series of webinars on ‘Reducing Scope 3 Emissions’.

The event featured guest speakers: Amelie Tan, UK & Worldwide Regional Lead - Commit to Action Programme, Science Based Targets initiative (SBTi); Sonya Bhonsle, Global Head of Value Chains & Regional Director Corporations, CDP; Rodrigo Barrios, Climate Change Manager – Supply Chain, Tesco; and Isobel Filipova, Design Engineer – Sustainable Product Development, Research & Development, Owen Mumford.

The recording can be found below, SBTi, CDP, and Owen Mumford’s slides can be found here, answers to questions asked during the Q&A here, and a summary of key takeaways can be found below.

Key takeaways

• Categories 1 and 2 of the Greenhouse Gas Protocol’s Corporate Value Chain Accounting and Reporting (Scope 3) Standard address Scope 3 emissions associated with Purchased Goods & Services and Capital Goods. Both categories require cradle-to-gate emissions to be included. CDP analysis has shown that emissions from these categories are material for most sectors, which has led to sector-based scoring being introduced into CDP reporting this year.
• For all Scope 3 reporting, it is preferential to use primary data from suppliers. The CDP Supply Chain Program helps companies to collect this data. There is also sector-specific guidance on supplier questionnaires, for example, wrap provides guidance on this specifically for the food and beverages sector.
• If primary data (collected directly from suppliers) is unavailable, businesses can use mass or spend to calculate their emissions from these categories (details outlined in Technical Guidance for Calculating Scope 3 Emissions). If some primary data has been collected, but there are gaps, the hybrid method can be used to calculate emissions; this uses a combination of supplier-specific activity data and secondary data.
• Tesco are actively encouraging, incentivising and helping their suppliers to reduce their emissions:
  • Tesco uses a sustainability-linked supply chain finance program which offers suppliers preferential financing rates if they meet targets around carbon data disclosure, emissions reductions, and progress against sustainability goals.
  • At a product level, Tesco is identifying hotspot areas where emissions can efficiently be reduced and are subsequently working with suppliers in these areas.
  • Trials of innovations and technology with sustainable farming groups has proved to be useful when reducing supplier emissions. For example, alternative feeds and methane inhibitors are being trialed with these groups.
  • Tesco is implementing third-party verification schemes with strong climate and environmental sustainability implications (e.g. LEAF).
  • They are also encouraging suppliers to set their own targets which outsources some of Tesco’s tracking demands.
  • A network has been created where decarbonisation best practices can be shared; (Tesco Supplier Network).
  • To share best practice on overcoming common supply chain challenges, strategic partnerships can be built.
• Inconsistent supplier emissions data is a challenge for many businesses when reducing Scope 3 emissions from Category 1. Owen Mumford have addressed this challenge by asking suppliers to use a consistent methodology when measuring and reporting their emissions.
• Owen Mumford also conduct lifecycle assessments to inform them of emission hotspots in their supply chain. This helps them to reduce these emissions by design, be it physical, material or systemic.
• Companies such as BT (outlined in page 14 of their CDP response), are now clearly stating their preference to work with suppliers who are meeting climate-related KPIs and building climate-related clauses into supplier contracts. Adoption of policies such as this means that there is a clear competitive advantage for suppliers who are reducing their emissions.
• Tools can be useful for calculating upstream Scope 3 emissions. Examples of some free tools are Quantis and the SME Climate Hub’s Carbon Calculator tool.

Resources referenced during the event:

• BT’s CDP response
• Category 1 Technical Guidance
• Category 2 Technical Guidance
• CDP accredited solutions providers
• CDP Supply Chain Work
• CDP white paper on Scope 3 categories and materiality
• Cradle-to-gate definition
• DEFRA Emission Factors
• Greenhouse Gas Protocol’s Corporate Value Chain Accounting and Reporting Standard
• IEA Emission Factors
• LEAF
• Owen Mumford’s responsible business work
• Quantis tool
• SBTi Criteria and Recommendations
• SBTi Resources
• SBTi Target Setting Tool
• SBTi Net Zero Standard
• SME Climate Hub Carbon Calculator
• Tesco climate-related work
• Tesco Supplier Network
• Tesco’s sustainability-linked supply chain finance program
• 30-min UNGC E-Learning course on SBTs
• World Resources Institute – Estimating and Reporting Avoided Emissions
• Wrap
• 50LHome coalition

To register for other events in the ‘Reducing Scope 3 Emissions’ webinar series, please visit our website.