SBTi launches corporate guidance on Scope 3 decarbonisation

The number of companies calling on their supplier to disclose environmental data has increased by 24%

The supply chain is often part of a business’s value chain where the greatest deal of negative impacts occurs. CDP estimates that the average large multinational corporation will generate 11.4 times more emissions in its supply chains than in its operations. Supply chains can also be hotspots for waste, water use, deforestation, modern slavery and child labour, depending on the sector.

The new guidance outlines the relationships and structures that need to be built internally and external in order to catalyse action.

It recommends that businesses analyse their supply chain to outline which suppliers should be included under an engagement initiative, based on the total number, type, and size of suppliers. Other factors corporates need to consider include how to leverage change over suppliers, what sourcing and procurement trends need to be considered and categorising supply chain climate and environmental risk levels to uncover hotspots.

The guidance also notes that to track progress towards supplier engagement targets, companies need to implement an effective data collection solution.

The guide also recommends introducing workshops, one-on-one coaching, expert “office hours” or email support and e-learning and other online-based training such as webinars in order to make engagement continuous in order to drive improvements.

SBTi’s chief impact officer Maria Outters said: “Addressing supply chain emissions enables supplier engagement and with that, the possibility of enhancing efficiency, transparency and resiliency across the value chain. It also can help build credibility among and within key stakeholder groups such as investors, customers and employees, who increasingly expect companies to take broader responsibility for the reduction of carbon emissions across their supply chain.”

The SBTi has grown exponentially to become the world’s biggest verifier of corporate climate targets. Currently, more than 4,700 companies have pledged to set SBTi-aligned goals to reduce emissions from their operations and value chains, with around 2,400 of them having had these goals officially verified.

Supply chains can often be ignored by corporates, with many targeting decarbonisation across Scope 1 and 2. While frameworks like the Science Based Targets initiative do require Scope 3 targets if emissions from that area account for more than 40% of the total, it is still an overlooked area of action.

The number of companies calling on their supplier to disclose environmental data to CDP increased by 24% between 2019 and 2020.

The guidance also offers four key recommendations in order to equip suppliers with the skills and knowledge to set science-based targets and feedback to the end-user organisation. These include, reporting on methodologies, assumptions, and data sources used for tracking annual performance, defining an auditable process to update and maintain supplier lists, refreshing Scope 3 inventory and data annually and considering third-party verification on calculations that determine the targeted list of suppliers.