Tackling the Scope 3 Challenge: Unraveling the Benefits for First Movers

November 28, 2023

The three essential components for advancing emissions reduction in the grocery industry are collaboration, product-specific impact data, and harnessing technology.

When it comes to the complex task of reducing a company's Scope 3 greenhouse gas emissions, supply chain managers are confronted with a difficult challenge. These emissions, often sizable and indirect, stem from a company's activities beyond its immediate control. Estimating, tracking, and reporting emissions is especially complex in the food industry, where they can make up as much as 93% of the total. For multinational grocers, their supply chain can involve thousands of suppliers, sub-suppliers, and tens of thousands of SKUs, requiring emissions estimation not only of production methods but also on product use, processing, and disposal. Given climate challenges—be they physical or regulatory—companies must fine-tune their value chains. This isn't just about risk management; it's about grabbing opportunities too.

Getting the full data set for every product, especially beyond Tier 1 suppliers, is nearly impossible initially. We suggest beginning with the data you have and gradually enhancing the collection over time. Reducing Scope 3 emissions is not only good for the climate; it is also good business, providing multiple benefits, including:

- Reducing operational costs

- Increasing revenues through higher-margin products

- Collaborating with suppliers for better supply chain control

- Ensuring regulatory compliance with upcoming regulations (CSRD, CSDD, SEC, etc.)

- Attracting and retaining top talents in your company

These benefits are quantifiable. According to the latest BCG survey, 40% of respondents estimated an annual financial benefit of at least $100 million for meeting emissions reduction targets—a 3pp increase compared to the 2022 survey. According to the survey, companies leading in emissions reduction  show four notable traits:

- Collaboration with suppliers and customers: Recognizing that Scope 3 emissions are generated and influenced by suppliers, companies should prioritize robust engagement with them. 

- Product-level emissions calculations: Reporting emissions at the product level, using Life-Cycle Assessment (LCA), provides essential granularity for decision-making, policy choices, and consumer communication such as labels. Without this granularity, relying on category average data only could result in a similar climate assessment for a vegetarian pizza and a salami pizza.

- Utilization of technology to assess emissions: Companies leveraging powerful technologies are 2.5 times more likely to comprehensively measure emissions, enabling the identification of emissions hotspots and the formulation of effective reduction strategies. With the help of AI-driven platforms, such as inoqo, you can start measuring your Scope 3 emissions with no hassle, using the data you have today and gradually enriching it with suppliers' data.

- Consideration of emissions-reporting regulations: With Scope 3 reporting moving towards mandatory status with the upcoming EU regulations such as CSRD, companies recognize emissions-reporting regulations as pivotal enablers of reduction.

Through these different levers, grocery retailers and F&B brands will be able to successfully reduce their Scope 3 emissions and lead the sustainable transformation in their industry.

Let's Collaborate on Your Scope 3 Emission Reduction!

At inoqo, we conduct product impact assessments for grocery retailers and F&B brands, calculating the climate, biodiversity, and social impact of all your food and beverage products. Reach out to us at hello@inoqo.com to explore how we can guide your business towards a low-impact future.

November 28, 2023

by Laura

from inoqo

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