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Supply Chain
Connecting the Dots:
Digital Tools Helping Companies Tackle Scope 3 Emissions

Quantifying scope 3 is undeniably daunting. But the Partnership for Carbon Transparency is working to create the 'internet for emissions data' — which would set a common framework for all organizations to seamlessly connect, exchange and derive insights from emissions data.

When it comes to carbon disclosure and reporting, few challenges are harder to crack than quantifying the extent of an organization’s scope 3 emissions — estimated by the World Economic Forum (WEF) to represent over 80 percent of emissions across most business sectors.

While no one is pretending that addressing scope 1 and 2 is easy, they are at least under the control of a single entity to manage. On the other hand, scope 3 is created indirectly by a company’s entire value chain and consumers. This means liaising with potentially thousands of customers and suppliers to access their data and understand the carbon footprint of every item the producing firm uses. This could run into billions or even trillions of data points for the largest companies.

When accounting for scope 3 emissions, companies share a common challenge: a lack of sufficiently granular, accurate and verifiable primary product-level data. Complexity in emissions accounting and data sharing, as well as a diverse ecosystem of stakeholders, adds to the challenge. However, there are signs that industries are aligning to cooperate and tackle it together.

The emergence of PACT

I recently represented Avery Dennison at Climate Week NYC 2023 within the Scope 3 Summit organized by the World Business Council for Sustainable Development. There, I shared a stage with the Partnership for Carbon Transparency, better known as PACT. Via its Pathfinder Network, PACT has set the very bold ambition to create the “internet for emissions data.” This would set a common framework for all organizations to seamlessly connect, exchange and derive insights from emissions data. So-called ‘data exchanges’ — where companies share carbon footprint data — do exist already; but they tend to be industry specific, and data formats are inconsistent. Large organizations would typically have to access many of these data exchanges to build a holistic picture of scope 3 emissions and may encounter data consistency and interoperability challenges. This is why PACT is so exciting, since it is attempting to bring this all together in one place.

Metrics matter; and PACT ensures every company has access to standardized information from its suppliers. This enables companies to take targeted action on their value-chain emissions and to create accountability for reduction progress. In lending its support to PACT, the WEF notes that “what’s needed is end-to-end value chain transparency and sharing of actual and verified emissions data, not estimates or averages, that are accounted for down to the individual product and supplier level.”

Data conformance with PACT

I’m pleased to say that Avery Dennison’s connected product cloud is among one of the first PACT-conformant solution providers within the Pathfinder Framework version 2.0. enables scope 3 tracking across the value chain at item level, to build trust and transparency among all stakeholders. Over the last two years, the platform has helped organizations manage over 30 billion items throughout various supply chains. Being PACT conformant means that can be leveraged across complex supply chains to enable data sharing in a consistent and interoperable way that’s needed to grapple with the challenge of scope 3.

Scope 3 and Digital Product Passports go hand in hand

While the challenge of quantifying scope 3 can seem daunting today, the emergence of PACT and data exchanges will make it much less so in the future. One huge catalyst for these initiatives is likely to be the introduction of Digital Product Passports (DPP) in the European Union.

The European Commission’s Circular Economy Action Plan is laying the groundwork for the phased introduction of a DPP in key markets by 2027. Initially, this will affect textiles, industrial and electric-vehicle batteries, and consumer electronics. It means that all companies selling these products to end users will need to develop a deeper understanding with their suppliers to understand exactly what is in each item and its origins — including carbon-footprint data — and ensure information is easily accessible by the consumer.

The good news is that scope 3 and DPP compliance go hand in hand. This will spur action across all sectors to collaborate further and make the path to scope 3 much easier than it appears today.