The International Panel on Climate Change’s (IPCC) latest report reinforces a global consensus that human carbon emissions are directly influencing rapid changes to our environment. What was once ‘once in a lifetime’ extreme weather conditions have now become annual occurrences. Climate change is now on everyone’s doorstep; not even our richest nations can avoid the fallout from our destabilising natural systems. Just this summer, we have already seen in Europe the devastating effects of unpredictable heavy rainfall and prolonged heatwaves.

A critical finding in the report is that greenhouse gas emission pledges made to date will not keep global warming below the critical 2°C threshold. On our current trajectory, we are likely to reach our 1.5°C warming prediction by 2040, although there is still a 50% chance that we can keep below the 1.5°C threshold assuming our emissions remain below 500 billion tons. However, to achieve this, both governments and organisations must act quickly to deliver on their net-zero pledges.

Following the release of the report, a shared question in the majority of organisations is what they should do next. No doubt there will be some big changes from policy makers coming down the line in response to the IPCC report, impacting every business and individual. In the business space, the focus of these changes will be around quantification of organisations carbon impact and how it can be decreased at all levels of operation.

To achieve net-zero, organisations need to develop a holistic view of their current footprint; and not just an examination of onsite operations and energy usage (traditionally known as Scope 1 and 2 emissions). External logistics, upstream and downstream operations (Scope 3 emission) need to be considered for organisations to understand their true impact.

Figure 1: Understanding Scope 1, 2 and 3 emissions (Source-WRI WBSCD, 2014)

For many organisations, particularly in the UK, Scope 3 emissions will be more significant than Scope 1 and 2 emissions, as many in the UK are reliant on purchasing goods from abroad. A graphic example of this are the 2017 greenhouse gas emissions of C&A displayed, by Scope, below. Under SECR, companies are only asked to report on Scope 1 and 2, so reducing the impetus for undertaking Scope 3 quantification activities. The C&A case though, reveals Scope 3 to be very much the elephant in the room on the emissions front.

Figure 2: C&A Total Greenhouse Gas Emissions in 2017 by Scope (Source- C&A, 2018)

An organisation’s Scope 3 emissions, especially on the upstream side, are themselves built from the Scope 1 and 2 activities of their suppliers. In an ideal world, those suppliers are undertaking similar audits and are acting to reduce, mitigate or offset them and hence the impacts they pass on to you. But this is not an ideal world: they may not yet be engaged in this process. Undertaking your own assessment of Scope 3 gives you insight into their activities, improves transparency and opens a basis for dialogue, negotiation and collaboration on reducing Scope 3 impacts.

Similar considerations apply on the downstream side. How your product is used and the in-use impacts that may appear out of your control, but that’s not entirely true. Scope 3 – like a life-cycle analysis – places your own operations in context. It can inform actions like improving instructions to users and modifications to product design or even moving to servitisation. It could even allow you to assess in-use carbon offsetting which may well have promotional value.

The key message is that understanding Scope 3, this allows you to take control of the ‘emissions agenda’ through having a complete picture of hotspots in your supply chain. You can then make choices about where to source and where to put your efforts for change.

Through clarity on Scope 1, 2 and 3 emissions, organisations can set impactful and achievable medium-term targets, but this requires a sound goal-setting platform. Here, science-based emission targets are the most widely recognised target-setting method. A crucial part of their approach is the open publication of yearly progress reports. This improves accountability, a key component of action for change.

Environmental realities may feel overwhelming, but there is a real appetite for change. This year’s COP26 is pivotal: it’s likely that a new net-zero standard will be released soon and that there will be agreement on governance rules which ensure rewards for those organisations making emission cuts.

In our 26 years of operating in the material and product resources space – across multiple sectors – there has never been a time so ripe for assisting organisations to make the changes necessary for the net-zero world. Many Scope 1 and 2 changes can be made using classical techniques of elimination, replacement, reduction and resource efficiency. These value-stream techniques are in the Oakdene Hollins armoury; we routinely assess impacts and recommend actions based on material consumption, waste, water and carbon impacts.

More importantly, we were the first UK consultancy to systematically evaluate and promote (on behalf of the government) the benefits of ‘circular’ products – products given new and extended lives. The significance of these is their hugely reduced Scope 3 impacts which form easy targets for purchasers compared to new products, and equivalently they reduce the Scope 1 and 2 impacts of the agents who remanufacture them. We are therefore uniquely placed to map across all Scopes, determine hotspots and align them to actions accessible right now, aligned to credible and defendable science-based net-zero targets.

Contact our consultants Daisy Ash and Katerina Michailidou if you would like to discuss more about our Scope 3 offerings.

Code red for humanity: What must organisations do now?