French companies commit to climate action
During the One Planet Summit in December 2017, 91 French companies united for the Global Compact of the United Nations and made concrete commitments to reduce their GHG emissions across energy, transport, buildings and agriculture. These companies will invest 300 billion euros over four years – including energy efficiency, renewable energy, low carbon technologies and sustainable agricultural practices. 60 of the 91 companies have committed to reduce CO2 by using an internal carbon price and a commitment to science-based targets. Many companies that have committed to aggressive carbon-reduction goals and have already deployed energy efficiency and renewable energy sourcing, will need to turn their attention to supply chain and scope 3 emissions to achieve their goals.
Reducing supply chain emissions can seem challenging, as these emissions are outside of a company’s direct control and require a deep understanding of each scope both up and downstream.
Scopes 1-3 Defined
GHG Protocol is the world’s most widely used greenhouse gas accounting standards. Calculation guidance can be found here: http://www.ghgprotocol.org/scope-3-technical-calculation-guidance
Scope 1: Direct emissions from a company’s operations or are under a company’s control, such as onsite fuel combustion, company-owned vehicles and in-house energy consumed by processing equipment.
Scope 2 Indirect GHG emissions that result from purchased and consumed electricity, heat, steam or cooling.
Scope 3: Other indirect emissions from the value chain activities. These emissions occur because of a company’s operations but are produced from sources neither owned nor controlled by the company. Examples include emissions generated by suppliers, transportation of goods, capital goods, employee commute and business travel and use and end of life of sold products.
The Belgian experience: sectorial agreements
Since 2003, the Walloon energy policy in industry has primarily focused on the signing of voluntary sectorial agreements between regional authorities and industrial sectors to improve their energy efficiency and reduce their CO2 related emissions. The first phase, ended in 2013 and focused on scopes 1 and 2, showed a high participation rate and good results: 16 sectors, 185 companies and 203 production sites committed, representing over 90% of Walloon industrial consumption. The energy efficiency of Walloon industry has improved by 16.5% and CO2 emissions have been reduced by 19.3%.
For the second phase, lasting through 2020, the agreement expanded to feasibility studies on renewable energy sources and opened to a carbon assessment on site, including scope 3.
Only 4 of the most relevant categories of scope 3 are mandatory:
Purchase of goods and services: emissions during the manufacturing of raw materials
Transportation (freight): from the supplier to the plant and then to the client
Use of the products manufactured by the company: energy used during the life time
End of life treatment of sold product: GHG emitted during the waste treatment
Scope 3 is often the biggest contributor to emissions for industrial sites
Emissions from 25 industrial sites were calculated and the average proportion of each category is demonstrated in the following pie chart.
This carbon footprint calculation is the starting point for a low-carbon strategy, and has identified that an industrial company’s supply chain accounts for the largest portion of its overall carbon footprint (28 percent for scopes 1 and 2 and 72 percent for scope 3)
The first category (54 percent) is the purchase of goods and services, and includes all upstream (i.e., cradle-to-gate) emissions from the development of products. This was estimated using industry average emission factors and data on the mass of raw materials. The second category includes all energy – from fuel combustion to electricity consumed on site. Although 28 percent of carbon footprint represents a large chunk, it could come unexpected that energy, representing the entirety of scope 1 and scope 2 emissions, is not an even bigger proportion for operations of the industrial nature.
Collecting Data and Calculating a Carbon Footprint
Prior to diving into data collection for a carbon footprinting exercise, there are a series of steps that we will not cover in depth, but must take place to ensure that it is a successful endeavor:
- Choose a methodology
- Determine the reference year
- Define the organizational and operational scope
- Determine the product(s) considered
- Develop of a cartography of the flows of CO2
- Understand data accessibility
After these decisions have been made, and the scope of the calculation is clear, you may begin to collect the data and calculate a carbon footprint.
Data collection can be quite tedious the first time that a carbon footprint is performed on scope 3 because data is not always readily available, and companies are not typically used to handling scope 3 information. For example, the weight of the purchased materials may not be available, but rather a number of parts that must then be converted into weight.
We recommend collecting as much primary data as possible from the databases and, if available, using secondary data. Accuracy of data can also be a sticking point when it comes to calculating scope 3. We recommend not getting lost in the details. First, calculate CO2 from the most important sources and those known in detail. Then, calculate emissions from the least important sources in aggregate when greater detail is not available. For example, all raw materials purchased in small quantities can be grouped into a global category with only one average emission factor. ISO standards note a “materiality” limit, or a tolerance for errors and omissions of 5% over the entire carbon footprint, indicating that a certain level of estimation of emissions is acceptable.
Calculation of the carbon footprint enables a company to determine the stages of the life cycles that generate the most significant emissions (those most exposed to carbon price changes) and to identify the most emitting stages. These are the hot spots where the company can act first and foremost to make an immediate impact. Stay tuned for part 2 of this blog, where we discuss how to reduce emissions from scope 3.
Schneider Electric provides sustainability reporting services and support to companies — from building questionnaires to identifying a clear sustainability roadmap. Reach out to our team for more information.
To continue on to part 2 of this blog on how to reduce scope 3 emissions, click here!
Contributed by Valérie Limauge, Sustainability Consultant for Schneider Electric