5 steps to launch your Scope 3 reduction roadmap
Amid new regulations and rising transparency demand, companies can tackle the largest part of their carbon footprint with this Scope 3 roadmap. Read More
Scope 3 emissions can account for more than 70 percent of a company’s total greenhouse gas (GHG) footprint, as noted by the World Economic Forum. This substantial portion highlights Scope 3 emissions’ critical role in corporate climate action and emphasizes the urgency for stricter reporting standards and transparency in disclosures.
For instance, the European Union’s Corporate Sustainability Reporting Directive (CSRD), which took effect in January 2023, mandates that large entities report Scope 3 emissions, with full implementation to be phased in from 2024 to 2028. Meanwhile, California’s SB 253 and SB 261, signed into law in October 2023, require comprehensive emissions reporting and climate-related financial disclosures for large companies starting in 2026. These regulations represent significant advances in global efforts to enhance corporate transparency in climate impacts, yet most organizations haven’t even started to close the gap on their Scope 3 emissions.
What is the challenge?
So, where does an organization start when reporting its Scope 3 emissions? More specifically:
- What steps can organizations take to begin reducing their Scope 3 emissions immediately?
- In the absence of complete emissions data, what information can influence Scope 3 emissions reduction?
Developing a universal roadmap
In collaboration with Arizona State University and Persefoni, a climate management and accounting platform for enterprises and financial institutions, our team of sustainability graduate students addressed these two questions head-on. Under the guidance of Nicole Darnall, Professor of Sustainable Enterprise, we created a 5-step roadmap for Scope 3 supply chain emissions reduction. By integrating strategic actions with clear, targeted goals, organizations can initiate meaningful changes, setting a course for substantial and sustainable environmental progress. With this roadmap, organizations willing to devote time and resources to reducing their Scope 3 emissions, can start now.
Step 1: Start
Begin by identifying your organization’s end goal. Determine the key objectives for reducing supply chain emissions to ensure your organization is headed in the right direction.
Planning for a successful initiative requires understanding your organizational structure and identifying your key stakeholders. Identify which existing systems, processes, and stakeholders will support your efforts and which could hinder them. Preparing for potential roadblocks and risks could be the difference between a failed initiative and a successful one.
Key stakeholders may include your largest suppliers by volume and/or spend as well as internal leaders and teams such as sourcing, purchasing and/or merchandising departments. Key systems and processes may include supplier management systems, employee performance standards, environmental management systems and/or public sustainability goals.
Actions:
1.1 Map your organization’s stakeholders and identify collaborative partnerships that you’ll need for success.
1.2 Create a stakeholder engagement strategy to facilitate buy-in.
1.3 Begin mapping available data, while identifying data quality or accuracy issues.
1.4 Conduct an assessment of your organization’s procurement and purchasing policies.
1.5 Form a task force of stakeholders who will champion your initiative.
While planning is essential, it is important to adhere to a timeline and proceed to the next steps of the roadmap. Your organization should avoid getting stuck in perpetual planning and concentrate on driving impactful changes immediately.
CSRD Made Easy: From Compliance to Opportunity with AI-Enabled Sustainability Solutions
Step 2: Measure
Developing a comprehensive and accurate understanding of your organization’s GHG footprint is the building block for managing it. Determine if your organization has the expertise to undergo such an effort alone and which Scope 3 categories will be relevant. Leveraging the GHG Protocol is pivotal and your organization may also need external support for carbon accounting. Measuring your Scope 3 emissions will enable your organization to identify which supply chain partners contribute the most emissions to your footprint.
Actions:
2.1 Determine what existing data can support your emissions calculation. While securing supplier-specific emissions data may be a long-term goal, consider estimating your supply chain Scope 3 emissions to start by using a spend-based method. This method calculates emissions by using purchase cost and average emission rates.
2.2 Integrate a specialized carbon accounting platform. Tools such as this support the accuracy and auditability of your emissions estimates.
2.3 Initiate discussions with the largest contributors of Scope 3 emissions in your supply chain.
2.4 Ensure your organization does not succumb to “analysis paralysis,” in which overanalyzing data prevents decision-making. Knowing your organization’s emissions estimation is not a stopping point, but a stepping stone to enable continued action.
Step 3: Leverage
Discover what best practices exist within your industry that your organization can leverage. Evaluate which internal tools and/or external organizations could support the achievement of your Scope 3 reduction goals. To accelerate progress, identify suppliers with a common interest in reducing emissions and/or transition purchase selections to suppliers with a more favorable carbon footprint.
Actions:
3.1 Consider CDP reporting for enhanced transparency and accountability.
3.2 Design a vendor scorecard integrating metrics for GHG emissions reporting and adopt the Federal Contractor Climate Risk Management Scorecard as a best practice because it identifies core sustainability reporting criteria and practices. Apply the scorecard to the highest-spending and/or most strategic suppliers first.
3.3 Explore integration of sustainability data collection and reporting into procurement contracts. Consider The Chancery Lane Project, which provides 100-plus freely available clauses to incorporate into legal documents to encourage climate action.
Step 4: Strategize
Strategy is the process of identifying the steps toward realizing a goal and confirming a course of action. Creating an effective strategy will require determining if your organization has the buying power necessary with suppliers to motivate change. If not, identify relationships you can leverage to increase your ability to influence change and offer supply chain partners support in their own efforts.
Actions:
4.1 Actively collaborate with stakeholders and suppliers to plan strategic investments.
4.2 Engage suppliers in exercises, such as setting targets or success metrics for Scope 3 emissions reduction.
4.3 Assess your organization’s ability to implement any new strategies by conducting a SWOT analysis to identify strengths, weaknesses, opportunities and threats.
4.4 Evaluate engagement strategies, procurement policies and scorecard reviews on a quarterly basis.
4.5 Break down long-term goals into short-, mid- and long-term steps.
Step 5: Evolve
As the emissions reporting landscape changes, your strategy may need to follow. Your organization must regularly reflect on the process and learnings and fine-tune. If your organization desires to lead the way for others, look for opportunities to initiate a “snowball effect” throughout your value chain and beyond, such as sharing this roadmap and best practices with your suppliers and partners.
Actions:
5.1 Review and regularly update your organization’s purchasing guidelines and policies to include best practices that can be shared across every department of your organization. Set ambitious, but achievable emission reduction goals aligned with science-based targets (SBTs) and recognized standards, such as the ISO 20400 standard for sustainable procurement.
5.2 Advocate for systemic transformations in industry practices and government policies for effective Scope 3 emissions reduction.
5.3 Implement sustainability requirements in procurement processes, mirroring successful approaches such as integration of sustainability criteria into request-for-information (RFIs) and contracts.
5.4 Encourage suppliers to follow suit of your public disclosure through CDP, which fosters a collaborative approach to emissions data transparency.
5.5 Regularly reassess the effectiveness of supplier engagement strategies based on feedback, best practices, and technological advancements.
5.6 Integrate more granular emissions data to increase the accuracy of your emissions estimation, such as cradle-to-gate emissions data specific to a supplier and product.
What’s next?
In addition to a growing regulatory focus on Scope 3 emissions, investors and other stakeholders are increasingly expecting organizations to demonstrate their actions to mitigate and adapt to climate change. While GHG emissions accounting is complex and rapidly maturing, don’t let perfect be the enemy of good. This Scope 3 roadmap is designed to help your organization get started now — to address regulatory and public expectations and pave the way for meaningful sustainability progress.
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Ash Hannig
Louise Sturges
Carmia B. Frazier
