Addressing Scope 3 Emissions of Industries with FigBytes: A Sustainable Solution

Introduction

Today, it is widely understood that greenhouse gases are the culprits behind global warming and the disruption of our climate. The Intergovernmental Panel on Climate Change (IPCC) consistently underlines the pressing need to decrease carbon emissions urgently in order to avert the most severe consequences of the climate emergency. But, as we strive towards a more sustainable future, it becomes crucial to address and reduce the Scope 3 emissions of industries.

In recent years, there has been a notable surge in the adoption of ESG (Environmental, Social, and Governance) initiatives, prompting companies and their supply chains to prioritize ethical sourcing practices. But the actual intensity of Scope 3 emissions of Industries is not known. Understanding the scope and impact of these emissions is essential for businesses. FigBytes enables companies to engage with suppliers, customers, and other stakeholders involved in the value chain to collaborate on Scope 3 emission reduction initiatives.

Decoding Scope 3 Emissions of Industries: A Global Perspective

decoding scope three emissions of industries

As per climate scientists, a reduction of up to 85 percent in global carbon dioxide emissions below 2000 levels is necessary by 2050 to constrain the global mean temperature increase to 2 degrees Celsius above pre-industrial levels. The Greenhouse Gas Protocol (GHG Protocol) is an internationally recognized standard for quantifying and disclosing greenhouse gas emissions.

The Greenhouse Gas Protocol offers the most globally accepted guidelines for measuring greenhouse gas emissions. The protocol classifies GHG emissions into three distinct ‘scopes.’

Scope 1 encompasses emissions directly originating from sources owned or under control. On the other hand, Scope 2 deals with indirect emissions stemming from the acquisition and utilization of electricity, steam, heating, and cooling.

Scope 3 carbon emissions of Industries comprise greenhouse gas emissions that occur indirectly within an organization’s value chain, but they are not under the organization’s direct ownership or control. Examples of scope 3 emissions include the transportation of goods using vehicles not under the organization’s ownership, the utilization of products sold by the organization, and the disposal of waste, among other factors.

fifteen distinct scope three emission categories

The GHG Protocol outlines 15 distinct examples of scope 3 emissions. These cover different business activities such as purchased goods and services, waste, upstream transport, upstream/downstream leased assets, business travel, processing of sold products, investments, and capital goods.

Apart from that, the GHG Protocol also provides seven qualitative criteria for identifying and reporting the above examples of scope 3 emissions.

The Unique Footprints of Industries: Scope 3 Emissions Insights

Each and every industry has its own distinct environmental footprint. This is due to their mode of operations, sourcing, and distribution. So, formulating generalized standards for reducing Scope 3 emissions of Industries will be irrelevant.

Similarly, comparing scope 3 carbon emissions of one industry to another is like “comparing someone’s beginning to someone else’s middle.” For example, comparing emissions from agricultural produce and coal production is like comparing two entirely distinct entities. Further, each industry possesses unique characteristics that substantially influence its contribution to Scope 3 emissions in the overall GHG emissions landscape.

scope one two three emissions by sector

In the Capital Goods sector, nearly all of the total emissions fall under Scope 3, whereas in the Cement industry, the primary concern revolves around Scope 1 emissions.

Scope 3 Emissions of Industries: The Uncharted Territory of Carbon Footprints

Scope 3 Emissions in a Supply Chain Ecosystem

Any company can normally and easily measure their Scope 1 and 2 emissions, as it is within their organization. On the other hand, calculating scope 3 emissions which are under the control of suppliers or customers is hard to measure. As Scope 3 emissions of Industries are not only outside the organization’s control but also left to the discretionary decision of suppliers and customers. Hence, calculating Scope 3 emissions involves tracking numerous activities across the entire business model from suppliers and end users.

Solutions exist to deliver net zero majorly for Scope 1 and 2 emissions

Scope 1 and Scope 2 emissions can be reduced to significant instant as they are measurable. For instance, an organization has the option to procure renewable electricity, and renewable gas or make the shift to electric vehicles and reduce their Scope 1 and 2 emissions. But the same is not feasible with Scope 3 emissions of industries.

Scope 3 emissions of Industries are nearly always the big one

In numerous cases, Scope 3 emissions of Industries constitute over 70 percent of the total carbon footprint for businesses. For example, an organization engaged in product manufacturing, substantial carbon emissions often stem from activities such as raw material extraction, manufacturing, and processing.

Industries have less control in reducing Scope 3 emissions

Suppliers will exert significant influence on emissions reduction through their own choices in procurement and product design. So, reducing Scope 3 emissions will require collaborate solutions with current suppliers, or require significant changes to supply chain. So, unless and until the proper monitoring of Scope 3 emissions is done, formulating solutions cannot be comprehensive.

As an example, Schneider Electric mentioned that engaging with suppliers presents an opportunity to reduce 6 million tonnes of CO2 emissions, a figure 20 times larger than what Schneider Electric can achieve independently.

Monitoring Scope 3 emissions create a comprehensive sustainable business practice

Businesses around the world are continuously searching for the best available practice to reducing Scope 3 emissions as part of their Net-Zero plans. On that note, monitoring Scope 3 emissions can help in identifying the emissions hotspots of the industry and also let the organization know the amount of control it has on Scope 3 carbon emissions. Thereby aiding the industry in reducing scope 3 emissions.

For example, Volvo, the Swedish car manufacturer, states that over 95% of its total emissions are attributed to Scope 3 emissions related to driving its vehicles. To attain its net-zero emissions goal by 2040, Volvo has established targets for Scope 1, 2, and 3 emissions across various aspects of its business.

FigBytes: Empowering Industries for Sustainable Scope 3 Solutions

FigBytes is committed to advancing industries shift towards a sustainable future by promoting climate action through data insights derived from disclosure. With FigBytes we offer you a way to understand, automate and even report the Scope 3 emissions. Further, by leveraging FigBytes’ capabilities, industries can not only streamline their sustainability reporting but also drive meaningful change in reducing their Scope 3 carbon emissions.

Precise calculations and monitoring of Scope 3 emissions of Industries

FigBytes can establish an accurate method for quantifying both your upstream and downstream Scope 3 emissions. This empowers your organization to influence suppliers and select vendors based on their emission reduction practices, fostering genuine business sustainability.

Help in your dedication to reduce Scope 3 emissions

According to McKinsey’s report, 94% of the companies enrolled in the Science Based Targets initiative have committed to reducing emissions related to their customers and suppliers. This underscores a robust commitment within businesses to tackle and alleviate greenhouse gas emissions throughout their supply chains.

FigBytes can assist you in this effort by categorizing customers and suppliers based on their Scope 3 emission data. With access to real-time data and analytics provided by FigBytes, businesses can set ambitious but achievable emission reduction targets and monitor progress towards them.

Assist you in your Zero Carbon Project Commitments

The Zero Carbon Project aims to facilitate the global transition towards a low-carbon future by collaborating with 1,000 suppliers, who are accountable for approximately 70% of its upstream carbon emissions. The project is working towards reducing carbon emissions throughout its supply chain. Collaboration with FigBytes can make emission reduction into reality by measuring and outlining strategies for Scope 3 emission reduction.

Formulating Shot in the Arm Strategies

Emissions categorized as Scope 3 for your company might align with another company’s Scope 1 and 2 emissions. This provides an opportunity for a more holistic approach to address climate change systematically. Partnering with FigBytes can identify such areas and prioritize actions for faster emission reduction.

For example, you can design a programme for your small and mid-sized suppliers tailored to reduce their Scope 1 and Scope 2 emissions, which can reduce your Scope 3 emissions. This will also enable them to access the same type of knowledge and technologies that your company has for emission reduction.

Conclusion

In short, cutting emissions across all Scope 1, 2, and 3 categories presents significant rewards in terms of addressing climate change and its impacts. By utilizing FigBytes, industries can gain valuable insights into their Scope 3 emissions sources and identify areas where reductions can be made.

Industries can also formulate a lifecycle analysis to analyze the carbon footprint of your entire supply chain. This will help in creating tailor made solutions for reducing Scope 3 emissions of Industries. By utilizing FigBytes platform, industries can take proactive steps towards creating a more sustainable future while simultaneously driving positive change throughout their value chains.

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