Understanding Scope 3's Impact on Business Strategy

As leaders in the food and agriculture sectors, we face a significant challenge: Scope 3 emissions largely come from on-farm processes. This not only represents a major part of our environmental impact, but also poses a critical challenge to our operational resilience. Understanding these emissions and their broad implications across our companies’ various departments—from Procurement and R&D to Marketing and Compliance—can help us integrate emissions reductions into our core business strategy. Here are some vital questions we should all be considering: 🔍 What specific challenges are your departments facing due to climate change? 🔍 How can insights into scope 3 emissions help us better address these challenges? 🔍 What opportunities does proactive climate action present for your team and our organization as a whole? Mitigating scope 3 emissions should be a priority, not just for sustainability officers, but for every leader within our organization. The first step is for cross-functional leaders to gain visibility into the company’s emissions. Then, they can create more actionable plans for reducing the company’s carbon footprint, for developing more sustainable products, or communicating the company’s commitments and progress to the market. How are your peers across the org using sustainability data? What obstacles might you face when incorporating scope 3 emissions data into strategies across departments? If you’re interested in learning more about how each department can use scope 3 data, see our latest blog post. Link in comments 👇 #Scope3 #Sustainability #AgricultureResilience #FutureofFood #ClimateAction #Leadership #BusinessResilience

There's one concept (especially as it relates to Scope 3) that will change the way you speak to leadership about sustainability, guaranteed. The profit leverage effect. Every conference I've been to in the last year talks about how sustainability leaders need to drive shareholder value and embed themselves in the strategic direction of the business. Here's what the profit leverage effect means: Every dollar saved through reducing expenses goes directly to the bottom line!!! "To achieve the same impact on profit through increased revenue, a business must generate significantly more sales, typically 5 to 20 times as much, depending on its profit margin. For instance, if a company has a net profit margin of 10%, saving $1 is equivalent to increasing sales by $10." So what does this mean when you apply to scope 3? In short, every single metric ton of CO2e has a cost associated to it. For simplicity, take for example Scope 3 categories 6: Business Travel. Thanks to the fact that you are measuring your business travel CO2e you now have visibility into one of your organizations costs. To reduce business travel emissions, you might: ✈️ Implement policies favoring virtual meetings—cutting unnecessary travel and directly saving thousands on flights, hotels, and meals. 🚆Choose more efficient travel methods, such as trains instead of short-haul flights or economy over business class, immediately reducing expenses and emissions. 🤖Leverage technology to optimize scheduling, ensuring fewer, more impactful trips that maximize productivity and minimize waste. Suddenly, your Scope 3 strategy isn't just an environmental initiative, it's a powerful lever for improving your bottom line. If you frame sustainability efforts around the profit leverage effect, you bring a business framework and your message to leadership from a nice-to-have into a must-have strategic priority. Long post a bit longer, next time you pitch your Scope 3 strategy to leadership, consider the profit leverage effect. It shifts the conversation from sustainability being an expense to being an investment that directly enhances shareholder value. **this post was human written, AI edited. But I hand selected the emojis :))

While every organization’s supply chain process is unique, most emissions contributing to its carbon footprint come from the supply chain (scope 3 - upstream). This includes emissions from design, testing, production, distribution, to waste disposal. Consequently, the majority, relevant big data and opportunities reside within this scope. To drive meaningful change, it's essential to: 1️⃣ Collaborate with suppliers to set shared sustainability goals, fostering the development of eco-friendly products, optimizing costs, mitigating risks, and transforming business processes that can reduce carbon emissions. 2️⃣ Support suppliers in transitioning to renewable energy sources such as wind, solar, and hydroelectric power (onboarding, training, alliances, financing) 3️⃣ Implement circular economy principles—reduce, reuse, recover—using lean production approaches, that can reduce cost, generate growth and brand awareness. The World Economic Forum estimates that adopting circular business models could unlock up to USD 4.5 trillion in value by 2030. 4️⃣ Establish a supply chain data hub to leverage AI and advanced analytics will enable streamline reporting for inventory, logistics, and distribution optimization, thereby creating more sustainable business processes. 🌟 Recognize that your sustainability department can play a pivotal role in shaping your organization's strategy. It's NOT just about reporting, disclosure, compliance; it's about taking actions with your historical data to gain insights, predictions, drive change, strategic plan and EXECUTE key initiatives. In this way, you will really place sustainability at the heart of your business strategy, which I call “Sustainability Centricity,” In this paper, published by Cliff Henson, you will find inspiring stories from Schaeffler, Schneider Electric, and Microsoft on how they reduce risk and build resilience by advancing supply chain sustainability. https://lnkd.in/gS38qUJD #SustainabilityCentricity #DataAI #SupplyChain #CircularEconomy #Scope3Emissions #Action

Scope 3 is broken... and other things you're afraid to tell your CEO Scope 3 emissions account for 75%-99% of corporate carbon footprints, mostly from upstream supply chains. Our current Scope 3 EIO methods were built for check-the-box compliance reporting, not driving reductions. EIO models are calculated by multiplying your supplier spend times a global or regional industry-wide average emission factor. That cannot account for any actual decarbonization action your supplier takes, not even in theory. Put another way, if a large chunk of your suppliers lowered their corporate emissions by 10% this year, your Scope 3 emissions _would not decrease_. At all. Let that sink in. Deep down, we all know this, that's just the part we never say out loud, and we carry on in collective cognitive dissonance, with vague murmurings about "data challenges". We need to flip Scope 3 on its head. Embodied carbon at the product level should be treated as an objectively measured product specification; so that carbon performance is treated just like other critical product specs; like weight, size, delivery volumes, speed, cost, etc. Imagine if we treated any other performance spec like this... you go to buy a laptop, and when you ask how much storage the laptop has, the seller advises you to build your own science team to _estimate_ the laptop's storage based on global industry averages. Does this sound bonkers to you? It is. But we've all been doing this for so long that we’ve managed to persuade ourselves that it’s completely normal. And we wonder why we've made virtually no global progress reducing the Scope of emissions that dwarfs all others. OK, so how do we change this? How about we start treating embodied carbon as a performance spec that the _seller_ is responsible for calculating and eliminating? That's exactly how every other performance spec works. We have a data standard in ISO 14067, and an emergent standardized methodology in the WBCSD – World Business Council for Sustainable Development PACT framework. And there are a wide and growing variety of Product Carbon Footprint (PCF) providers that use #AI and process-based input data for manufacturing and transportation, to calculate PCFs rapidly, cost-effectively, and at scale. This approach eliminates the need for theoretical abatement cost curves, because now your suppliers can price carbon for you directly when they quote you $X change in price for Y-kg carbon reduction per unit. Procurement can do what it does best, negotiate based on objective performance criteria; and suppliers can do what they do best, engineer products and services objectively optimized to what their buyers want. We all know it's time to fix Scope 3. What specific actions can we take today to ensure our Scope 3 emissions reduction efforts lead to actual decarbonization? Image credit: DeepAI . . . #SustainabilityLeader #Scope3 #GHGemissions #supplychain #energytransition

I met Devin when he shared on Fortune 500 pharma company, Bristol Myers Squibb's journey measuring & reducing their Scope 3 (value chain) emissions. Here's his 4 pieces of advice.. For context: As of July this year, BMS has received approval for its near-term and long-term Science-Based Targets. Given BMS’s enterprise footprint involves >80% of Scope 3 GHG emissions, one of its near-term goals is to engage 75% of its suppliers to develop SBTs by 2028 From my perspective, this is admirable, provided support is offered to their suppliers, as it will help drive further Net-Zero action throughout their supply chain Here's our summary of his 4 key pieces of advice to sustainability professionals tackling Scope 3 emissions reliant on suppliers 1) Be an influencer to accelerate the sustainability agenda your organization This requires partnering both inside the business, but also with suppliers. Ethical and responsible purchasing needs to be a priority from the beginning, and sustainability questions should be asked to suppliers during any RFP process. Procurement teams should include sustainability in meetings with suppliers on an on-going basis, making it a standing topic on the agenda. 2) Segment your supply chain to prioritize efforts BMS performed a climate maturity assessment to segment its suppliers and prioritize its engagement efforts — knowing the company cannot feasibly engage thousands of suppliers at once. BMS started by looking at its top emitting suppliers and then assessed their maturity — finding one third to be very mature, a third just starting out, and a third somewhere in between. The company then prioritized suppliers with low maturity and/or a higher perceived ESG risk. 3) Partner with industry peers to create a collaborative environment In Pharma in particular, companies have been working collaboratively with their peers, through the Pharmaceutical Supply Chain Initiative, to harmonize resources and offer subsidized programs to suppliers, acknowledging the burden faced by them. One such program is Schneider Electric’s Energize, which offers access to education on renewable energy purchasing, and acts as an entry point for suppliers who can choose to enter buying cohorts and partner with other companies to buy renewable electricity. 4) Take your time and be comprehensive “I would just be a little cautious when you see companies who are sprinting out in front, because of the complexity, particularly in the supply chain — there's just fundamental challenges that folks are not going to be able to solve overnight. And doing the maybe less sexy work of just engaging stakeholders, setting targets, building a language of sustainability — that's the work that may not make the headlines, but that's what's going to change the world in the coming years.” 💬 What responsibilities should larger companies own compared to suppliers (and vice versa) when it comes to their emission impacts?