Scope 3 reductions are key for credible Net Zero strategies

A new swell of Net Zero commitments has, unsurprisingly, been swiftly followed by questions around greenwashing. These are based on three key criticisms:

• Lack of details on the plan to get to long-term targets
• Lack of near-term actions and accountability
• Lack of value chain commitment and/or misuse of market mechanisms

In some cases, greenwashing claims are merited. In others, companies may lack the data, tools, or expertise to create best practice strategies with detailed plans to achieve them. The limiting factor for many companies underpinning all three is the complex challenge of Scope 3, or value chain emissions.

Value chain or “Scope 3” emissions are often the largest source of corporate carbon footprints, yet to date have been the lowest area of focus for most companies because of these common barriers:

• Limited access to supplier emissions data
• Lack of guidance on how to account and report the benefit of reductions from investments in dynamic supply chains
• Minimal incentives and recognition for investing in meaningful change beyond direct operations

The Value Change Initiative aims to credibly remove these barriers to driving down Scope 3 emissions, enabling companies to set and achieve ambitious Net Zero targets. For example, companies seeking to reduce upstream emissions with interventions among a group of suppliers that provide a common set of goods/services connected to their value chain, now have more clarity on how they can account and be recognized for the emission reductions they achieve

The Value Change Initiative aims to remove barriers to driving down value chain emissions and enable companies to set and achieve ambitious Net Zero targets.

Having tested versions of the first core guidance document in real-world applications via working groups focused on the Food & Beverage and Apparel sectors, Value Change has now published the final version of the “Value Chain Interventions: Greenhouse Gas Accounting and Reporting Guidance”.

This first Value Change Guidance supports companies in properly drawing boundaries, conservatively accounting for missing data, and credibly quantifying the climate impact of that intervention. This generates lower Emissions Factors for their purchased goods and services they report in their GHG inventories.

The guidance will now apply for ‘Built on GHG Protocol’ status and is already usable for reporting progress toward Science Based Targets. It will also be extended and expanded to include similar challenges in land-based emissions accounting, pending the completion of the Greenhouse Gas Protocol developments in this area.

Future work will address the unique challenges of other sectors, including finance, technology, transport, and pulp & paper, as well as the use of market-based approaches in Scope 3 collective action. This is expected include innovative approaches among multiple companies working to introduce improvements in a common sourcing area with an aim to catalyse deep reductions through collective action at the larger landscape level.

The first Value Change Guidance has been developed thanks to the support of EIT Climate-KIC, Gold Standard, Danone, Livelihoods Funds, Mars and thanks to all feedback and inputs provided by Value Change members.