Do You Want to Reduce Your Supply Chain Emissions
Walmart’s strong drive to promote scope 3 emission plan reflects the company’s tendency to respond to climate change. Over the years, environmentalists’ views on Scope 3 and the pressure for companies to address them have changed significantly.
Scope 3 emissions are generated by corporate purchases throughout the supply chain, including the use and disposal of transport resources and products. Scope 3 reduction needs consent and action from various companies.
Initially, when Wal-Mart resolved to reduce emissions in the supply chain, its infrastructure was still in its infancy with more focus on scope 1 and 2.
Zach Freeze (senior director of sustainability, Walmart), said: “We know exactly what Scope 3 is, but it’s difficult to find the right way to take the right actions and get our suppliers to keep reducing emissions”.
Freeze said that they couldn’t do well until Walmart launched the Gigaton project. It aims to reduce greenhouse gas emissions by 1 billion metric tons in the supply chain by 2030. This was one way to attract more suppliers.
How are these goals designed to be achievable and influential?
Standard goal setting
Wal-Mart primarily did not have an appropriate action plan. Later, non-profit organizations focused on emissions merged to develop a plan. Launched in 2015, the Science-Based Target Initiative (SBTi) helps the company set emission reduction targets in all areas. This completely prevents the global temperature to rise by 1.5°C or 2°C.
As the urgency to tackle climate change increases, so does the effort on scope 3. SBTi demands companies with scope 3 emissions to account for more than 40% of total emissions for Scope 3 targets.
The goals should be set as per the company’s requirements. Approximately 200 businesses have placed targets for 2020, with 240 companies to set within a year. SBTi identifies Scope 3 issues and gives companies the freedom to set emission reduction targets if their targets cover about 2/3 of their internal emissions.
Scope 3 goal for a company typically depends on its existing supply base and supplier relationship. If a company’s main supplier base is energy-intensive, changing energy purchases significantly reduce emissions throughout the supply chain, allowing the company to choose strength-based targets. Companies with high emissions can switch to multiple suppliers instead of reducing emissions by percentage.
Providing entry tools is one way to attract suppliers, but buyers like Wal-Mart can guide them through the supply chain and drive change. Communicating the importance of tracking and reducing emissions can be very helpful.
Create a business case
Transportation greatly contributes to Scope 3 emissions, as claimed by Anand Gopal, project director of the William and Flora Hewlett Foundation. You can easily check the emission reduction business cases. Compared to rails and roads, you need very few levers for marine and aviation. It also matters how shippers pack goods on all modes of transport. Without setting a Scope 3 target, Home Depot unloads pallets from trucks to maximize space utilization and allows retailers to reduce emissions and costs through more efficient trucking.
“Gigaton truly targeted on benefiting the company and the planet. It makes sense if you can do both,” Freeze said.
Reducing emission goes beyond scopes 1 and 2 to prioritize climate change mitigation and guide to leadership that dominates this concept over time.