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Clearing Scope 3 hurdles to set your science-based climate target

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Science-based target setting demands understanding scope 3 greenhouse gas emissions.  For many consumer packaged goods and food companies that requires looking upstream at agriculture-level emissions; Source: Pure Strategies.

This article is sponsored by Pure Strategies.

"Every government, company and shareholder must confront climate change," cautioned BlackRock CEO Larry Fink in early 2020. Climate scientists have laid out the path to thwart the worst effects of climate change, demanding net-zero emissions by 2050. This calls for aggressive climate action. 

An impressive 950 companies have heard this call to action and have committed to setting or have set targets in line with climate science, science-based targets (SBTs). They are both easier and harder to set than other sustainability goals. 

What makes them less challenging is that there are standardized methods. A company follows the guidance provided by the Science Based Targets initiative (SBTi) to develop a robust and credible goal. But that is where "easy" ends for most. Because SBTs are more aggressive than traditional targets, there are new hurdles to get over. 

Understanding Scope 3 emissions

One of the first obstacles is that SBTs need to address significant emissions in the value chain, across Scopes 1, 2 or 3. This calls on companies to understand their full carbon footprint, something many have not done because historically they have a limited focus of company-controlled impacts such as onsite emissions and energy use (Scope 1 and 2 emissions). 

The Scope 3 Evaluator is a good starting point. This is a streamlined tool that requires data that should be somewhat easier to pull together (spend on purchased goods) than traditional carbon inventories. The tool estimates Scope 3 emissions and highlights the likely sources of those impacts. This helps determine the material GHGs the goal should include.

As detailed in the report Implementing an Advanced Corporate Climate Strategy, Scope 3 emissions are often the majority of a company’s carbon footprint. Seventh Generation noted that more than 90 percent of its footprint was from Scope 3 emissions, namely energy use in consumer washing machines and dishwashers. For Ben & Jerry’s, Scope 3 emissions were driven by company ingredient purchases. As the SBTi manual notes, "If Scope 3 emissions compose over 40 percent of total Scope 1, 2 and 3 emissions, companies should develop an ambitious and quantitative Scope 3 target that covers the majority of Scope 3 emissions."

However, a screening assessment of the top sources of emissions usually is not enough to set the target. The screening assessment helps prioritize where to drill in further with higher-quality data. Consumer packaged goods and food companies, for example, usually need to look more closely at purchased goods and services by studying specific items — how much of each item is purchased and using appropriate emissions factors to identify within these items which are higher priority. Ben & Jerry’s noted in the report that dairy represents over half of the company’s carbon footprint and thus is a main focus area for their climate work.

The Scope 3 roadmap

Another common challenge is identifying how to reduce Scope 3 emissions. It is important to remember that purchased carbon offsets cannot be used to make progress under the SBT framework. So, companies need to develop an approach to realizing Scope 3 GHG reductions without offsets. Many find that SBT Scope 3 roadmap is a useful tool.

Building the roadmap requires identifying Scope 3 GHG hotspots, the drivers of the emissions and improvement opportunities to reduce those emissions. Key to this is exploring known, in-development and innovative emissions-reduction solutions and estimating the level of reduction with them. Companies often get value from conducting a detailed study or developing a custom calculator for their supply chains (which later can be used for tracking progress). Ultimately, reduction paths should be identified for most or all hotspots within the target’s boundary. 

At this stage, it is also helpful to estimate the cost with these reduction paths, even if there is not a high degree of certainty. However, not all GHG reductions come with a cost. One tool that some overlook is greening trends such as the increased use of renewable energy in electricity generation, improved agriculture productivity and other industry-level improvements.

VF Corp.’s roadmap includes sourcing renewable energy, pursuing recommerce and rental models and reducing emissions for its top nine raw materials. Some of these are new opportunities. The company found that its SBT helped to prioritize its investments. 

As Tim Greiner, managing director at Pure Strategies, points out in the corporate climate strategy report, "Setting science-based targets can be challenging, but is also an opportunity for companies."

There are important business benefits for companies that go down the SBT path. These include new products and services, competitive advantage, investor support, cost savings and supply-chain and regulatory risk reduction.

Using the methods from the Science Based Targets initiative and obtaining its approval, gaining a better understanding of emissions and charting a course to reduce emissions are keys to setting a science-based target. Then the work begins of reducing GHGs and tracking progress. 

While challenging, pursuing ambitious climate targets is part of our collective responsibility to navigate our planet away from the dire impacts of continued climate change. Ultimately, companies will gain more resilience and value while contributing to the greater aim of protecting the climate and humanity.

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