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Scope 3 emissions reduction: a strategy that cuts cost as well as carbon
Most of a company's emissions sit in its supply chain, so supply chain decarbonisation and Scope 3 reduction start with the few purchases that cause most of them. Find those hotspots, work with the suppliers behind them, change what you buy and design, and switch to supplier data so the reduction shows up in your numbers.
Why is Scope 3 the biggest part of your footprint?
Because most of the carbon in what you sell was emitted before it reached you. CDP found that supply chain emissions average 11.4 times a company's own operational emissions, and 28 times in retail. A report by the World Economic Forum and Boston Consulting Group found that eight supply chains, including food, construction, fashion and electronics, account for more than half of global emissions.
So a company can switch every light to LED, electrify its vans and run on renewable power, and still leave nine tenths of its footprint untouched. Scope 3 is where the tonnes are.
Where do you start with Scope 3 reduction?
With the few purchases that cause most of the problem. A first screen using spend by category, multiplied by average emission factors, is rough. It is also enough to show where to look. In most mid-sized companies, a handful of materials, components or services account for most of Scope 3, and a short list of suppliers sits behind them.
Call them the heavy few. Everything in a good reduction strategy flows from knowing who they are.
Don't try to measure all 15 Scope 3 categories in detail before acting. Screen everything roughly, then spend your effort on the categories and suppliers that dominate.
What works in supply chain decarbonisation?
| Lever | What it looks like | Effect on cost |
|---|---|---|
| Buy less | Less scrap, lighter parts, less packaging, tighter specifications | Usually saves money |
| Buy differently | Recycled content, lower-carbon materials, nearer sources | Neutral to a small premium |
| Move it better | Fuller loads, fewer part loads, rail or sea instead of road or air | Often saves money |
| Work with suppliers | Renewable power, efficiency projects, their own targets | Shared, sometimes saves them money |
| Design it out | Redesigned products, reuse and take-back, product as a service | Can open new margin |
The same WEF and BCG report estimated that around 40% of emissions in those eight supply chains could be cut with readily available, affordable levers. Even taking supply chain emissions to zero would raise end-consumer prices by 1 to 4% at most in the medium term. The expensive part is usually doing nothing until a customer forces the issue.
Manufacturers will find more on waste audits and circular business models in our sustainable manufacturing guide.
How do you get suppliers to cut their emissions?
Start with the heavy few, not your whole supplier list. Ask them for their own emissions data, explain why you need it, and give them a deadline. Then build the expectation into the relationship: your supplier code of conduct, your tender questions and, for the biggest, your contracts.
Smaller suppliers often need help, not pressure. A short guide, a template or a shared training session gets more data back than a demand letter. Many large companies now set a supplier engagement target with the Science Based Targets initiative, committing that a share of their suppliers will have science-based targets of their own. That is a useful model even if you never submit one.
Why might your reduction not show up in your numbers?
Because spend-based data can't see it. If you switch to a supplier with half the carbon at the same price, a spend-based calculation shows no change at all. If you negotiate a better price, it shows a fall that never happened.
The fix is to move your biggest categories to supplier-specific or hybrid data, as set out in the GHG Protocol's Scope 3 guidance. Do it for the heavy few first. That is where the reduction actually happens, so that is where you need to be able to prove it.
How do you build a Scope 3 reduction strategy?
- Set a baseline. Scope 1, 2 and a screened Scope 3 for a full, recent year.
- Find the hotspots. Rank categories and suppliers by emissions and pick the heavy few.
- Set a target. If Scope 3 is more than 40% of your total, the Science Based Targets initiative expects a Scope 3 target covering at least 67% of it.
- Choose the levers. Cost each action, give it an owner and a date, and start with the ones that also save money.
- Engage the suppliers behind the hotspots. Data first, then targets, then joint projects.
- Measure again each year. With better data each time, so the reductions you make are the reductions you report.
What this could earn you. Most Scope 3 levers are waste levers in disguise: material you scrap, air you ship, packaging nobody wanted. Our Sustainability Opportunity Discovery work starts there, comparing your own data with external benchmarks to find what the waste is costing you.
The companies that treat Scope 3 as a cost to manage will keep paying it. The ones that treat it as a map of their waste will find it pays them back.
Common questions
What is a Scope 3 reduction target?
A commitment to cut the emissions in your value chain by a set amount, by a set year, from a baseline year. The Science Based Targets initiative requires one when Scope 3 is more than 40% of total emissions, and it must cover at least 67% of Scope 3.
How do manufacturers reduce Scope 3 emissions?
Mostly through materials: less scrap, lighter designs, recycled or lower-carbon inputs, and joint work with the suppliers of the heaviest materials. Inbound and outbound freight is usually the next lever.
Can you reduce Scope 3 without supplier data?
You can make the reductions, but you can't prove most of them. Spend-based figures only change when spend changes, so move your biggest categories to supplier-specific data first.
Want help finding your heavy few? See our Scope 3 consultant service, or read what customers want from a supplier's emissions data.