Scope 3 Emissions: Making Sustainability Your Business

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As COP28 comes to a close in Dubai, the question emerges: is the world on track to prevent a climate catastrophe?

The Paris Agreement calls for a strong global effort to reach Net Zero by 2050. According to the Intergovernmental Panel on Climate Change (IPCC), global emissions must peak before 2025 and roughly halve by 2030 if we are to limit warming to 1.5°C. However, global emissions continue to increase, requiring immediate action to meet the 1.5°C target. One-fifth of total UK emissions are generated by businesses, so it is essential that they measure their carbon footprint and implement strategies to achieve Net Zero.

Scoping out the Problem

A company's carbon footprint is made up of different categories, or 'scopes'. Scope 1 covers a company's direct emissions from its owned vehicles and fuel combustion at company facilities (e.g., in furnaces and boilers). Scope 2 covers the emissions from the electricity and heat or steam that a company purchases. Scope 3 covers a company's indirect emissions, such as business travel, employee commuting and product distribution, purchased goods from suppliers, use of sold products, and product end-of-life. For many businesses, scope 3 is the largest source of emissions, accounting for over 70% of their total footprint.

Scope 3 emissions are particularly difficult to measure because they are not under the direct control or oversight of the reporting company. Measuring scope 3 emissions often requires collaboration with suppliers and life-cycle assessments (LCAs) of products to determine the full extent of emissions associated with a business. This can be expensive and time-consuming, so many businesses hire external consultants to conduct assessments and develop action plans.

A Business Matter

A new report by edenseven, Cambridge Management Consulting’s sister-company specialising in sustainability consulting, reveals that the FTSE 250 companies are far from achieving Net Zero goals and have serious gaps in their emissions reporting. According to the report, the FTSE 250 companies emitted more than 129 million tonnes of CO2 equivalent (CO2e) in 2022, equivalent to the annual emissions of 35 coal-fired power plants. Moreover, the report shows that the FTSE 250 emissions rose by 9% compared to the previous year, indicating a lack of progress and urgency in reducing their carbon footprint.

The report shows that only three-quarters of the FTSE 250 companies report their Scope 1 and 2 emissions, and less than half disclosed their Scope 3 emissions for 2022 and a baseline year. This raises doubts about the alignment of these companies with the Paris Agreement, and suggests that many of them are either unaware or unwilling to reveal their full emissions impact. This implies that the 129 million tonnes CO2e figure is an underestimate, and that the actual problem is much bigger. This puts some companies in a position where they cannot make informed and credible decisions to cut their emissions. It also exposes them to the risk of non-compliance with upcoming climate regulations, such as the EU’s CSRD and the ISSB’s IFRS S1 and S2, which require scope 1-3 reporting among other disclosures.

The report shows that many FTSE 250 companies are not taking sufficient action to align their Net Zero goals with the Paris Agreement, which aims to limit global warming to well below 2°C, and preferably 1.5°C, compared to pre-industrial levels. More than a third of FTSE 250 companies have not stated a target year for reaching Net Zero, and a mere 4% have adopted science-based targets through the Science-Based Targets initiative (SBTi). Science-based targets are crucial, as they ensure that businesses decarbonise at the rate necessary to meet global climate objectives and reach Net Zero.

How Cambridge MC & edenseven Can Help

Cambridge MC’s primary sustainability capabilities are located with our sister-company, edenseven, who strive to optimise the environmental potential for organisations through data driven sustainability strategies.

To simplify the process of measuring and reducing carbon emissions, edenseven has developed cero.earth, a comprehensive management tool that calculates and manages the full scope of emissions sources (scopes 1-3). Using cero.earth, businesses can visualise their emissions, identify areas for improvement, and monitor the impact of their reduction initiatives. By using cero.earth, businesses can make informed and effective decisions to help them reach Net Zero and comply with upcoming regulations.

There is a small window of time left to meet the Paris Agreement and minimise the worst effects of climate change.

For more information about how edenseven can help decarbonise your business, visit www.edenseven.co.uk, or learn more about cero.earth visit https://www.edenseven.co.uk/cero-earth.

About Cambridge Management Consulting

Cambridge Management Consulting (Cambridge MC) is an international consulting firm that helps companies of all sizes have a better impact on the world. Founded in Cambridge, UK, initially to help the start-up community, Cambridge MC has grown to over 150 consultants working on projects in 20 countries.

Our capabilities focus on supporting the private and public sector with their people, process and digital technology challenges.

For more information visit www.cambridgemc.com or get in touch below.