Another interesting and useful report (with a few caveats) concerning carbon emissions was published recently. The title and sub-title signpost the content pretty well – “Thought you knew the Scope 3 issues in your supply chain? Think again. Gaining visibility to hidden hot spots to move from targets to action to value.”
The report comes from Accenture, the tech services giant, and my first caveat is that the cynic in me read it and thought “Accenture are trying to sell me some pretty expensive consulting / technology services here”. However, let’s park that unworthy thought and move on to the content.
The authors identify (correctly) that organisations are struggling to deal with Scope 3 emissions – those generated in their supply / value chains – because they “don’t know where to find them”. So visibility into the supplier base is key to help identify opportunities and issues, and to support effective decision making and prioritisation of action.
So, they say, “In this report, we explore how, with the right combination of visibility, actions and collaboration, we can reach our goals and put the planet on the road to a more-sustainable future.”
For most companies, carbon intensity hot spots (as Accenture terms them) lie beyond their Tier 1 suppliers. Two-thirds of upstream emissions lie beyond Tier 1 and arise from complex supply networks that are often also geographically dispersed. So Accenture has developed a data model which looks to quantify these connections, giving users a more accurate picture of the location and size of upstream greenhouse gas emissions.
The report is particularly interesting when it looks at how sources of emissions vary by geography nd industry sector. So for some industries, power generation is responsible for a high percentage of the Scope 3 number. In other sectors, it may be raw materials and transportation. This is not surprising when you think about it, but it is good to see some serious analysis around the issue.
But the geography is also important, so even within the same industry there are differences. For instance, in the high-tech industry in China, most of the emissions are generated from within China. In the US and UK, the percentage generated locally is much lower. And if you compare the metals industry in the US and India, the latter location has higher Scope 3 emissions because coal drives the vast majority of Indian metals production, as opposed to more varied energy sources used in the US.
So the question then is – what do I do with this insight? Accenture wants firms to build a “digital core” which means pulling data, AI and technology into every part of the business to create an “intelligent operation.” But they suggest five more specific actions.
· Conduct a real multi-tier emissions hot spot analysis to set targets and drive the right actions
· Embed sustainability into category planning and supplier selection
· Integrate emissions into the supply chain control tower and implement a digital twin
· Support suppliers in their ongoing decarbonization efforts
· Collaborate across your sector, with peers, suppliers and ecosystem partners to speed up decarbonization at scale
I can certainly see that it is useful to understand (for instance) that buying steel from India has Scope 3 implications compared to buying from Europe. But it did lead me to think more broadly about Scope 3 and where the responsibility really lies. And my caveat to the general thrust of the report is this.
Is it really my responsibility as a buyer to understand every tier in my supply chain?
How far back am I expected to go? I mean, even the miner that digs metal ore out of the ground has its own suppliers with their own emissions – IT firms, caterers, construction firms – so they form part of the picture for the Tier. Indeed, when you think about it, we have an infinite loop of buyers and suppliers!
So shouldn’t it be the responsibility of my Tier 1 supplier to be gathering information about their Tier 1 suppliers (my Tier 2) and so on through the chain? In other words, if I buy a fabricated steel product, the manufacturer of that should be able to tell me about their emissions, including their own Scope 3, and they should therefore understand the difference between buying steel in India or Europe. Why should I be expected to provide the expertise and gather data through the whole supply chain?
I’ll leave it at that for now and perhaps pick up the argument in the New Year. In the meantime, the Accenture report is well-worth reading and is available here.