Speaker: Pankaj Bhatia, Director of GHG Protocol and the Acting Director of WRI’s Climate Program, hosted by Fergal Byrne, Executive Producer, The Sustainability Agenda
As questions surrounding Scope 3 emissions are rising on the business agenda, understanding why and how we must address them is key to achieving decarbonization. With that in mind, we have launched a new podcast series featuring senior business and thought leaders who talk us through their experiences in tackling supply chain decarbonization.
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In this podcast episode, we are talking with Pankaj Bhatia, Director of GHG Protocol and the Acting Director of WRI’s Climate Program. Tune in to listen to Pankaj talk about the importance of decarbonizing supply chains, the value behind the process and the challenges that lie within, and his take on the future of the Scope 3 Standard. Here is a quick recap to get you caught up.
What is the Value-Chain Approach?
An effective climate strategy requires a detailed understanding of a company's carbon impact. Until recently, companies have focused on reducing their own footprint, neglecting GHG emissions along their value chains. A lot of companies are jumping onto the net-zero bandwagon, working hard on reducing their direct emissions, often forgetting that footprint can be moved down the supply chain and still contributes to the overall company carbon profile. “A lot of companies are setting net-zero targets but net zero doesn’t mean anything without Scope 3.” To deliver a fully effective GHG reduction plan, all emissions need to be taken into account.
The number of companies taking on value chain targets and reporting on Scope 3 emissions is increasing, yet these are still the early days of adopting the standard, although it’s been around for twenty plus years. Some companies lag behind, being tempted to focus on more pressing and immediate challenges than developing a Scope 3 inventory. Engaging suppliers in reducing GHG emissions is a long-term investment that takes money and time. But it’s an opportunity that can’t be overlooked.
As for many companies Scope 3 is the largest poll of emissions, reducing it significantly affects total carbon footprint. How does it translate to business value for the company? Scope 3 management enables more efficient utilization of resources and materials. Value chain targets can drive innovation (for example, allowing for fundamental changes in the design of a product) and collaboration between different business partners across the supply chain. Over time, companies taking on Scope 3 targets become more competitive compared to others who aren’t doing similar investments.
Accounting for Scope 3 Emissions
By developing a Scope 3 inventory, companies can understand their overall carbon profile but that requires from their suppliers a dedicated capacity for collecting and calculating Scope 1 and Scope 2 information. Primary data may not be of the best quality and can be hard to verify. Companies can report on the secondary data, while they work on improving the data gathering processes. “You can’t change what you can’t measure” rings true but shouldn’t be a showstopper — it’s all about building the momentum for accurate GHG emissions reporting, driving integrity and transparency in the supply chain.
GHG Protocol can help. It provides the guidance for properly measuring a company's carbon profile and identifying key pain points to prioritize business action. It mandates two mechanisms: “accountability and incentives mechanisms” that actively drive decarbonization. Companies can ensure accountability within the value chain by imposing standards on the supplier level and incentivizing their efforts to meet GHG targets.
About the Scope 3 Agenda Podcast Series
The Scope 3 Agenda Podcast is a monthly series produced by EcoVadis in collaboration with Fergal Byrne from The Sustainability Agenda featuring stories from senior business leaders working on supply chain decarbonization to reduce Scope 3 emissions across different industries. In the ten episodes we talk to business and thought leaders from a range of industries and explore strategies, challenges and lessons learned by companies who have embarked on a decarbonization journey.
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