What are Scope 3 Emissions? Things to Know & How Visibility Helps

The world is at a critical point in the fight against climate change. Governments across the globe are urging businesses to do more to reduce greenhouse gas emissions across the supply chain. In response, companies are taking sustainable leadership to new levels, with a particular focus on reducing their Scope 3 emissions to actively assist in supply chain decarbonization.

You could argue that organizations, including yours, are already doing what they can to help cut supply chain carbon emissions. The evidence would support your argument. According to an Intergovernmental Panel on Climate Change (IPCC) almost 1000 companies across the world have set emissions reduction targets aligned with climate science.

However, for companies that have already taken action to reduce carbon emissions from their facilities, operations and purchased energy (Scope 1 and 2 emissions) the majority of their carbon impact is now a result of emissions that are out of their direct control, in the maze that is Scope 3 emissions.

What are Scope 3 emissions?

Scope 3 greenhouse gas (GHG) emissions refer to all of the indirect carbon emissions that occur as part of your supply chain and are not associated with the generation of purchased energy. Scope 1 and 2 carbon emissions will sit within your organization, while Scope 3 GHG emissions tend to be out of your control.  

The GHG protocol describes Scope 3 emissions as 'all indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream.'

According to the IPCC, many organizations report that 80% of their emissions fall under the Scope 3 category. With governments on a mission to put the planet on a pathway to reaching net-zero emissions by 2050, it could be argued that Scope 3 emissions are the most important ones to tackle.

However, that's easier said than done, given that Scope 3 emissions tend to be out of an organization's control. Nevertheless, businesses are making more of an effort to engage with suppliers to create more low-carbon, easy to recycle products and services that will help to cut supply chain CO2 emissions.

The top causes of GHG emissions

To cut your Scope 3 emissions, you need to know the top causes of GHG emissions. According to data compiled by McKinsey and the CDP a few years ago, most greenhouse gas emissions come from consumer-driven companies and e-commerce shipping, which account for approximately 33 gigatons of CO2 annually.

The question is, what causes transportation service industry emissions to be so high? A few factors include:

• Deadheading/empty backhauls: Driving empty trucks is always wasteful and needlessly adds emissions without contributing value or profits to the supply chain.
• Inefficient route planning: Excessive backtracking during deliveries also adds to emissions and increases the fleet's carbon footprint.
• Poor reverse logistics management: For every sale made and item shipped, there is a chance it will end with a return. Therefore, planning for return shipments must be routine practice.
• Limited visibility into transportation: Without clear insight into market trends, consumer demands, transportation rates, and fuel costs, waste will be more pervasive.
• Stop-and-go final mile: The frequent stops associated with city driving increase fuel consumption during deliveries and can present a difficult obstacle for transportation providers.

With the transportation industry under pressure to cut its carbon emissions in half by 2050—in order to hit worldwide sustainability targets outlined by many local, national, and global organizations—tackling some of the leading causes of GHG emissions is a top priority.

How do you reduce your Scope 3 emissions?

It's important to recognize that most of your opportunities to reduce emissions lie outside of your organization. New partnerships and optimization strategies, such as leveraging omnimodal capabilities, should be on your agenda for cutting your carbon emissions.

All this will lead to directly offset the cost of emissions by restoring efficiency across your supply chain, and it all begins with identifying areas of excess Scope 3 emissions:

• Assess problem areas and identify emission hotspots across your supply chain.
• Identify resource misuse and highlight energy risks associated with daily operations.
• Recognize which suppliers and partners provide benefits with emission control.
• Highlight third-party vendors and partners that contribute to emission concerns.
• Identify energy use and opportunities to reduce emissions within the normal function.
• Engage suppliers and assist them in implementing sustainability initiatives.
• Proactively engage team members and associates to improve emission levels.

Analyze everything, and then identify areas where you can improve beyond your facility. Once you know where you can make changes, you can implement practical ways to reduce your GHG emissions.

Across all three emission scopes, there are plenty of practical ways you can reduce your overall carbon footprint, including:

• Having step-by-step processes
• Fast and reliable collaboration with 3PLs
• Reliance on real-time data and analysis
• Up-to-date responses to disruptions
• Active monitoring and tracking of products throughout and after their useful life
• Data collection and analysis, to understand what happens to products and encourage recycling
• Scalable and adaptable management
• Constant evaluations and reviews
• Practical guidelines and fleet protocols

According to a Harvard Law School report:

“A more sustainable supply chain is one that is able to anticipate and adapt to unforeseen events. For companies that have stumbled during the pandemic as a result of supply chain miscues, it will be especially important to identify the right balance between efficiency and resilience, bearing in mind that efficiency risks need to be addressed at all tiers of the supply chain.”

Sustainability starts with visibility

Supply chain visibility will be crucial in helping you to reduce your Scope 3 emissions. While you may have made huge strides in reporting on environmental metrics, you may still lack a solid plan on how to achieve your goal of reducing your carbon footprint. This is where visibility across your supply chain becomes a game-changer in cutting your CO2 emissions.

How? Supply chain visibility helps you to reduce dwell time at facilities, provides upstream traceability, and eliminates empty miles.

• Cut dwell times: Knowing the location of your supply chain bottlenecks allow you to implement a highly-targeted, data-driven approach to reducing waste across your logistics operations using supply chain visibility software.
  
  For example, if your logistics operation involves transportation using refrigerated trucks, you can cut CO2 emissions massively. According to the American Transportation Research Institute, refrigerated trailers spend the longest of all truck types in detention (over 36% of deliveries spend four-plus hours in detention).
  
  Most of these have to remain in lengthy detention periods to ensure the continued freshness of goods. The result is wasted fuel and huge CO2 emissions.
  
  However, with supply chain visibility software, you can quickly detect detention and implement strategic appointment scheduling to help reduce dwell times.
  
  
• Better traceability: Traceability has long been a major challenge when it comes to sustainability. You need to know that your upstream suppliers are engaging in environmental best practices if you stand any chance of cutting your Scope 3 emissions.
  
  A real-time supply chain visibility platform gives you the capability to track information upstream and downstream. This means that you know exactly where your products are coming from and enable you to clearly communicate your sustainability goals.
  

• Eliminate empty miles: Often referred to as 'deadhead', empty miles represent one of the biggest drains on supply chain efficiency across the transport sector. According to research, heavy-duty trucks account for 57% of all GHG emissions in the logistics industry.
  
  Meanwhile, most of these trucks are driven empty 40% of the time, resulting in huge waste and, you guessed it, increased supply chain CO2 emissions. However, supply chain visibility software can help to eliminate empty miles.
  
  How? Visibility software can help you to identify round-trip opportunities across lanes within your network. In most cases, truckers are able to collect a return load from a nearby facility. As a result, this increases the utilization of the truck and prevents goods from having to be transported by another vehicle.

Real-time supply chain visibility helps you to balance efficiency with your sustainability goals, allowing you to:

• Estimate greenhouse gas emissions from freight activity
• Monitor how emission levels and patterns are changing over time
• Determine which lanes have the highest and lowest emissions
• Identify transportation modes (rail, ocean, truck) that contribute the most and least to emissions, at an aggregate level and on a per-shipment basis

How to start your Scope 3 emissions reduction journey

It's important to have a supply chain engagement strategy to help you tackle Scope 3 emissions. Numerous options exist that enable you to reduce your carbon footprint across your supply chain.

The Science Based Targets initiative (SBTi) recommends a 'Sectoral Decarbonisation Approach', which will allow you to set Scope 3 reduction targets based on sectoral differences, including expected growth and access to emissions reduction activities.

Meanwhile, you could implement 'absolute contraction', which enables you to set emissions reduction targets that are aligned with the global, annual emissions reduction rate that is required to meet 1.5˚C or WB-2˚C

Irrespective of your approach to sustainability, or the size of your supply chain, it's crucial that you recognize that climate leadership and long-term, sustainable profitability will depend on reducing your carbon footprint across your supply chain because emissions reduction is fast becoming a mainstream requirement.

Real-time supply chain visibility with Tive

Never again wonder where your shipments are, or how they’re doing. Tive’s combination of proprietary trackers and cloud-based software gives companies the visibility they need, enabling alerts, reporting and analysis on their inbound and outbound shipments. Take a trial today.