Scope
3
inventories have become an essential tool for organisations that are looking to
take meaningful action to improve the environmental impact of their business. It
can sometimes feel that sustainability efforts are a drop in the ocean; however,
prioritising sustainability shows the wider business landscape a commitment to
being both ethical and values-led. As more companies — with those in the IT
Channel no exception —
get further into their sustainability journeys, making more ethical choices and
aligning on who they partner with is a key point of focus.
With Scope 3 emissions accounting for over 80
percent
of the average carbon footprint of a business, managing external emissions can
be notoriously difficult and overwhelming; and the value of an inventory is only
as good as the data used to create it. It is therefore vital to collaborate with
diverse suppliers and keep track of the varied data that will help hit the
company’s sustainability goals. In 2023, an estimated 53
percent
companies were tracking at least some of their scope 3 emissions.
Tracking value chain emissions
Scope 3 emissions data are collected differently and with more difficulty than
scope 1 and 2. Scope 1 and 2 emissions cover the internal and external CO2
excretion of a single organisation, whereas Scope 3 emissions tracking factors
the impact of its
suppliers
on the environment.
By tracking each scope, the monitoring of emissions data suddenly becomes an
incredibly complex and time-consuming process hinged on the validity of each
supplier’s data. This complexity creates barriers for suppliers, with an
estimated 59
percent
of suppliers not logging Scope 3 emissions data in 2023. For larger
organisations, logging Scope 1 and 2 emissions can sometimes be a legal
requirement — however, for Scope 3 to be monitored successfully, Scope 1 and 2
emissions reporting must be mandated across all businesses and suppliers, no
matter their size.
To understand Scope 3
emissions,
an organisation must collate and track each dataset provided from the third
parties involved in their daily business operation. Naturally, this process
differs for each business; and depending on the resources available, the level
of detail that can be provided will vary and may not align with the Channel
organisation’s current goals. This is where process mapping, which can serve as
a checklist for the data requests, can be issued to stakeholders. Once all the
data is received, then Scope 3 inventory can be calculated.
The challenges
There are significant roadblocks faced by businesses when collecting and
analysing data for Scope 3 reporting. The validity of the datasets provided by
suppliers can be difficult to verify. Furthermore, datasets can require expert
analysis and organisation — all of which come at a cost. While some
organisations are implementing AI
to simplify these issues, their validity is still called into question.
Many suppliers do not have the time or resources to measure their own emissions
data, let alone source or calculate these numbers for partners — so, Scope 3
tracking can fall by the wayside.
Emissions data is sensitive; as such, businesses are likely to be unwilling to
share datasets or process maps either publicly or with partners. Datasets also
require significant time to obtain and analyse. If a supplier isn’t undertaking
this task or implementing it into their daily operations then a great deal of
uncertainty and additional administration, to ensure that these numbers are
correct and obtained timely, occurs.
There is also an issue when considering data validity. Having emissions data
that suggests a company is a high pollutant is undesirable across the industry,
with many suppliers aware of this. However, combatting this can take a great
deal of time, money and expertise that many businesses find inaccessible.
Consumers are not only becoming more aware of the sustainability impact of the
products and services they use — many are also educating themselves to interpret
the validity of claims made by organisations, with 70
percent of consumers
now attuned to
greenwashing
in their purchase process.
Collaboration is key
Further pressure is placed on Channel suppliers to track emissions and stay
conscious about implementing renewable and sustainable operations. These efforts
are almost doubled when pressure is applied on suppliers by purchasers. The
power that purchasers have and their influence can persuade suppliers to reduce
their emissions and hit their Scope 1 and 2 targets.
Tracking Scope 3 emissions is a difficult and tedious process for organisations.
Cross-business collaboration can also be a tricky area to navigate and thus
further slows this process down. By championing
collaboration,
the process with other businesses becomes easier.
From data to action
In 2021, only 12
percent of
businesses saw sustainability as a main priority. However, Agilitas’ 2024
Channel Trends report found that 41
percent
of the Channel now feel that sustainability will be one of the most impactful
trends for industry in the next 12 months.
A key network of businesses and suppliers are established when Scope 3 emissions
are tracked. For a single business, dozens of suppliers are likely to be engaged
across their operations; as such, each of their direct emissions data or process
maps must be examined. When engaging these
businesses,
organisations concerned with their Scope 3 emissions are likely to only engage
with suppliers also concerned with their emissions data or work with current
suppliers to implement the resources needed to do so.
With customers more likely to purchase from a company with sustainability
targets, it is no wonder many in the Channel are now focusing on tracking Scope
3 emissions. Regardless of the company’s intent, a positive environmental result
is still seen — with organisations across the Channel focusing on their and
their suppliers’ direct emissions ahead of internal and government targets.
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Deborah Johnson
Deborah Johnson is Head of ESG at Agilitas – a global provider of technology solutions for IT Channel companies.
Published Oct 17, 2024 8am EDT / 5am PDT / 1pm BST / 2pm CEST