Going the Extra Mile Down the Supply Chain
Carbon reporting practices are becoming more widespread, supported by both voluntary and mandatory protocols. Early versions of Greenhouse Gas accounting protocols, such as the World Resources Institute Greenhouse Gas Reporting Protocol released in 2002, concentrate on greenhouse gases emitted directly onsite (scope 1) and those attributed to electricity consumption (scope 2).
But leaders in carbon accountability have long recognized the benefits of taking a deeper look at greenhouse gas emissions. From the inception of carbon reporting protocols over a decade ago, scope 3 has been defined as carbon impacts associated with an organization’s processes but that are not directly tied to fuel combustion and electricity use. Scope 3 emissions include:
Employee commuting to and from workplace
Activities of franchise organizations
Footprint of supply chain
Life-cycle carbon footprint of resources, products and other business inputs
Scope 3 emissions are significantly harder to measure than other emissions, often requiring significant investment just to obtain the necessary data. Most would-be carbon managers are using all their existing resources to monitor and manage energy-related emissions. In addition, many organizations are not interested in assessing scope 3 emissions, worried that they would quickly expand the scope of managing carbon into the realm of impossibility. Further, there is an argument against accounting for scope 3 emissions in that they should already be included in the scope 1 and 2 emissions of another organization. For example, the greenhouse gases emitted during an airplane flight can count as scope 3 emissions for a company sending its employees on business travel, but also count as scope 1 emissions for the airline. Reporting both could entail double-counting.
Notwithstanding the challenges, leaders in the field are diving in headfirst. By assessing the life-cycle carbon impacts of all of their activities, these organizations are changing the marketplace through their demands for accountability. Imagine a large retailer that insists on life-cycle carbon reporting for the products it sells. Walmart has recently announced plans to do just that, estimating a global reduction of 20 million tonnes of carbon equivalent.
Another example is a manufacturer that requires suppliers to account for carbon emissions associated with the materials they deliver. While this policy can cause additional expense upfront in the form of additional analysis in an already competitive field, it ultimately can change the game. This study by the World Resources Institute examines the efforts of sixty such firms that are transforming the marketplace through their commitment to transparent and comprehensive carbon reporting.
As the leaders look deeper into their scope 3 emissions, many more organizations will be “pulled along,” leading to a widespread expansion of voluntary greenhouse gas reporting and setting the stage for better management of carbon emissions worldwide.