Companies Struggle with Managing Scope 3 Initiatives for Large Supply Chains

As corporate sustainability programs continue to mature among companies around the world, with more than 5,700 organizations having set science-based targets for emissions reduction, the measurement and management of Scope 3 emissions is becoming an increasing priority for many sustainability and supply chain management (SCM) teams. Accenture estimates that 60% of all global emissions come from supply chains, and other studies indicates that the percentage is significantly higher in some industries, such as consumer packaged goods (CPG). Larger companies’ supplier engagement programs, designed to assess and mitigate Scope 3 emissions from their value chains, are driving rapid growth in the number of organizations embarking on sustainability journeys, which is creating new challenges and capacity constraints for SCM teams and suppliers alike. Companies are tasked with shepherding hundreds, and sometimes thousands, of suppliers through the carbon emissions footprinting and target setting process, a voluminous burden that even the largest organizations are ill-equipped to handle. The challenge is particularly acute for small and medium-sized businesses (SMBs), who frequently find themselves faced with significant new compliance requirements but little idea or guidance on where to start.

Scope 3 Supplier Engagement Challenges

For sustainability and SCM groups within larger companies, the sheer volume of suppliers to manage is the most daunting challenge of all, and gathering accurate emissions data from a complex supply chain with multiple tiers can be expensive, time consuming, and resource intensive. According to the Hackett Group, the average company has 3,000 suppliers per $1 billion in spending. Companies within a supply chain can include some of the world’s largest providers of materials, components, products, and services, many of whom have mature sustainability programs and are well-equipped to meet their B2B customers’ sustainability requirements and needs. Yet sustainability supply chain managers still face the challenge of volume – the required communications, data aggregation and reporting, target setting, and tracking of progress against goals typically lead companies to focus on their largest suppliers, since that is the group that can most quickly and effectively move the needle on their Scope 3 emissions objectives.

However, the much greater challenge for sustainability and SCM groups lies with the “long tail” of smaller suppliers to an enterprise – typically SMBs who are immature suppliers, a term used to describe companies whose sustainability initiatives are nascent. Relative to their larger counterparts, immature suppliers need much more education and training, guidance on reporting and target setting, systems, and tools, and advice on emissions abatement strategies. But companies are often under-resourced to serve the needs of the long tail, leaving the job of supplier engagement incomplete and only partially effective. A different supplier engagement model is required for companies to maximize their effectiveness by reaching more of their supplier base, and therefore drive meaningful progress in Scope 3 emissions reduction.

The Supplier Edge Program

Canopy Edge has designed the Supplier Edge program to address these challenges for sponsor companies and their suppliers alike, as a turnkey solution to accelerate and expand supplier engagement, Scope 3 commitments, and supply chain decarbonization. Supplier Edge helps companies scale their supplier engagement initiatives quickly, providing immature suppliers with the guidance and tools they need to assess their sustainability strategy, calculate Scope 1 and 2 footprints using either carbon accounting software or spreadsheet-based approaches, establish reporting mechanisms, and set realistic emissions reduction targets. Based on Science Based Targets Initiative (SBTi) criteria, Supplier Edge is provided at no cost to sponsor companies and at affordable rates to participating suppliers.

Companies who encourage their suppliers to work with Canopy Edge’s consultants provide those suppliers with immediate access to decades of combined experience in GHG accounting, ensuring accurate measurement and reporting of emissions, clear identification of data gaps, implementation of best practices for data collection, and utilizing advanced tools to analyze emissions comprehensively. Additionally, our experience allows suppliers to benchmark performance against industry standards and peer companies, providing valuable insights for setting realistic and ambitious target setting and abatement goals. To find out more about getting started on accelerating and scaling your supplier engagement initiatives using Supplier Edge, contact Canopy Edge for an assessment of how we can quickly launch a highly effective and efficient program to make meaningful emissions reduction progress within your supply chain.