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| 2 minutes read

Net Zero claims will remain just that without Scope 3 emissions in the equation

This week’s release of the Corporate Climate Responsibility Monitor 2022, published by NewClimate Institute in collaboration with Carbon Market Watch has reported that, according to its analysis, the headline climate pledges of 25 of the world’s largest companies really only commit to reduce their emissions by average 40%, not the 100% suggested by their “net zero” and “carbon neutral” claims. 

While there are several good carbon reduction practices already in play, there is a greater degree of urgency and scaling up required to make more meaningful progress. The devil in the detail surrounding offsetting plans as a means to round out net zero calculations versus direct carbon neutralisation activities is also cited in the report as misleading, and highlights the difficulty in distinguishing between real climate leadership and unsubstantiated greenwashing.

A number of companies studied are also omitting Scope 3 emissions from their plans, which we have explored in a previous post, despite these emissions typically making up the majority of its carbon footprint.

Just three of the 25 companies reviewed clearly commit to deep decarbonisation of over 90% of their full value chain emissions by their respective net zero and zero emission target years and, while the report gives food for thought and appears critical, it is important to balance this with a point of view of why this is. There is no shortage of ambition around carbon reduction but translating this into meaningful action is proving very hard.

Standards are ambiguous, tiered supply chains are not transparent and the cost/benefit trade-offs of carbon reduction actions are typically not compelling. Many companies, especially those mired in existential inflation pressures, are not set up for fast decision making and action taking across different functions.

Unpacking this complexity is key to reducing Scope 3 upstream emissions, where we believe material, enduring change can and should be made, which will in turn catalyse the efforts of supply chain players across all industries to improve their own carbon reduction efforts.

We see three things which are helping companies make a difference:

  • Taking a pragmatic approach to identifying the carbon hotspots in product range, supplier practices, raw material choices and the energy and logistics surrounding these.

  • Identifying the main options that would reduce carbon in these hotspots with structured impact assessment of practical projects and actions, working with product design and suppliers to leverage work already in flight and aligning carbon reduction to the strategic agenda.

  • Cross functional agility to mobilise teams of different people internally and externally with suppliers to ensure these projects deliver, whether they are product changes, supplier switching, energy efficiency, or transport changes.

It is clear that Scope 3 action and transparency is highly valued in business – perhaps more than ever before – as companies tackle the many societal and environmental disruptions at their door. Given the wavering trust in media and governments as a result of disinformation, finding the right way forward to combat and communicate carbon reduction is rapidly emerging as a competitive advantage –  commercially and reputationally – as well as critical to our future. As the report concludes, “companies will be the innovators that find the solutions to the climate crisis, but they must be subject to scrutiny and regulation.”

Given the wavering trust in media and governments as a result of disinformation, finding the right way forward to combat and communicate carbon reduction is rapidly emerging as a competitive advantage.

Tags

carbon reduction, scope 3, shouldcarbon, supply chain
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