As companies start to take Scope 3 seriously, they need better approaches to engage suppliers, measure emissions, and reduce them. At SupplyShift, we’ve been helping customers gather Scope 3 data from suppliers – about their facilities and their products – for over ten years. We’re seeing a clear trend for companies that are struggling with what to do next: A category or material-based approach to managing Scope 3 GHGs in the supply chain is what’s needed most.
Why? Spend-based Scope 3 estimates are not meaningful enough to initiate improvement cycles. Tier 1 supplier company-level GHG emissions, or even facility GHG emissions, are great places to start, but usually only the beginning of the journey. But carbon footprinting at a product level is beyond the plans of most suppliers in the coming years. A category-based approach is best suited for more mature companies to manage Scope 3 reductions now and into the future.
How do we know this? We have standardized assessment tools for Scope 3 at the company, facility, category, and product level, and we have seen what works. We’ve noticed that most suppliers still need to look at their own facility emissions and they need to use our Scope 3 calculator to be able to respond to their customers. Very few can provide a product carbon footprint when it is requested. So while digging deeper to get real information and reductions, it’s essential to meet suppliers where they are.
What is a category-based approach to Scope 3?
The specific approach varies for each spend category, key ingredient, or material. For each of these, the drivers of high emissions, levers to reduce emissions, methods of reduction, and even measurement practices are different. By managing GHGs by category, you can align procurement category strategies, understand key risks and opportunities, and use your procurement organization to manage performance for what matters most in the categories. While the specifics vary for each category, the overall approach always includes:
- Ask whether the supplier is doing the right thing in each key purchasing category. Are they measuring their emissions, and have they set reduction targets?
- Ask them about the key drivers of emissions for each category (key ingredient / raw material) to see if they have high carbon intensity.
- Ask if they have calculated the carbon footprint of that ingredient or material and if they haven’t then use an established emissions factor to estimate.
- Finally, automatically calculate your Scope 3 from that supplier and give the supplier a performance score based on all information provided.
To help with this, we’ve recently launched our Indirect Spend Category-Based Assessments and our Food Category Scope 3 Tool for ten major food commodities. And we plan to add more over time. Which are most important to you? Additional information is available from the Scope 3 Peer Group, a peer group of global retailers, brands, and suppliers aiming to accelerate value chain carbon emission reduction.
The best part is that these category-based tools complement our existing suite of Scope 3 tools for anyone starting out, including our GHG Leadership & Reporting Assessment (company level) and Scope 3 Calculator (facility-level). Either of these can be deployed to your first tier or your upstream suppliers.
Get in touch for more information on how SupplyShift can help your organization with your Scope 3 efforts. We’d love to talk with you!