Many companies are making progress with scopes 1 and 2 (direct emissions related to their operations), however, addressing scope 3 emissions is essential for any serious sustainability plan. Scope 3 emissions are often more complex as they include a company's entire value chain, meaning it has the potential to be over 11 times higher than direct emissions. This means that cutting these emissions offers significant environmental and business benefits.
Switching to renewable energy across the supply chain can offer an impactful approach to help tackle these often harder-to-manage emissions. To make this switch, companies need to understand their scope 3 emissions and how to engage their supply chain in these efforts.
One of the primary challenges in reducing scope 3 emissions is that they are difficult to track and report, especially given the lack of access to specific data from suppliers. Without detailed information, it's tough to measure reductions or make credible sustainability claims accurately. Additionally, many suppliers lack the resources or technical expertise to switch to renewable electricity on their own.
Collaboration is crucial in overcoming these issues. Engaging suppliers early and showing them the benefits of renewable energy can have a huge impact. For example, AB InBev, in partnership with South Pole, is advancing 100% renewable electricity across its value chain by aggregating Power Purchase Agreements (PPAs), reducing emissions and costs while empowering small and mid-sized partners in Europe and the U.S. to participate. Learn more about our partnership with AB InBev here.
To effectively reduce scope 3 emissions, businesses should focus on supply chain collaboration and a strategic approach. Here are some practical steps:
Begin by assessing your supply chain using spend data to identify which suppliers contribute most to your scope 3 emissions. Gathering primary data from suppliers is essential to making credible claims about sustainability and reducing emissions. This foundation is critical for driving sustainability and supply chain management efforts.
Prioritise working with suppliers that have the largest impact on your carbon footprint and are open to adopting renewable electricity. Engaging these suppliers helps set the stage for broader change across your supply chain. Strong supplier relationship management will help create your network of sustainable supply chain partners.
Building strong communication channels with suppliers is essential for effective collaboration. Training and workshops on renewable electricity can help suppliers understand how their sustainability efforts can make a difference. These can be offered by companies directly or facilitated by a third party like South Pole.
Each region and industry has different energy needs, so it's important to tailor renewable energy solutions. Consider options such as Energy Attribute Certificates (EACs), which are essential tools for companies and their suppliers to claim the use of renewable electricity and reduce scope 2 emissions. By retiring EACs, companies and their suppliers can make legitimate claims on renewable energy use and reduce scope 2 and 3 emissions.
EACs should meet international standards like those set by the Greenhouse Gas Protocol, CDP, and RE100 for credibility. Learn more about EACs here.
Other solutions include Purchasing Power Agreements (PPAs), onsite renewable energy generation, and green tariffs.
Incentives play a key role in driving supplier engagement. Highlighting the cost savings and reputational benefits of renewable electricity can motivate suppliers. For smaller suppliers, offering bulk renewable energy procurement deals can make participation more feasible and strengthen overall supply chain collaboration.
Tackling scope 3 emissions is essential to any business’s sustainability journey and offers a competitive edge as global regulations tighten and customers become more climate-conscious. Although scope 3 reductions can be challenging and complex, engaging suppliers in renewable electricity initiatives, such as power purchase agreements (PPAs) and energy attribute certificates (EACs), can drive meaningful emissions reductions, support the global shift toward a low-carbon economy, and strengthen the overall sustainability of the supply chain.
As you strive to decarbonise your supply chains, South Pole is here to support you with targeted, collaborative solutions:
By adopting renewable electricity and focusing on reducing scope 3 emissions, you can secure a resilient, sustainable business model while contributing to a low-carbon future.
Contact us today to incorporate renewable electricity throughout your supply chain
