Supply Chain

Serious About Scope 3:
Pioneering Companies Embracing Complexity, Reaping the Benefits

There’s no doubt Scope 3 emissions reductions are challenging. How do you get supplier data? Without recognition toward climate performance targets, is it even worth it? Good news: Answers to these questions are becoming clear.

Sponsored Content | / This article is sponsored by Gold Standard | By Sarah Leugers | Published 5 years ago | About a 5 minute read

Image: Vegetable seedlings distribution and training in a Barry Callebaut pilot project in Cameroon | Barry Callebaut

If there’s one consistent message about climate strategies, it’s that Scope 3 emissions reductions are challenging. What emissions are you responsible for? How do you get supplier data? How do you account for emissions from upstream or downstream partners? Without recognition toward climate performance targets, is it even worth it?

Good news: Answers to these questions are becoming clear. In 2018, Gold Standard — with strategic partners the Science Based Targets Initiative, Danone, Mars and Livelihoods Funds — launched the ValueChange program, introducing new guidance that shows companies how to report on emission reductions from value chain interventions in line with the GHG Protocol and to count toward their science-based targets.

The first focus was on the Food & Beverage sector, including guidance specifically to account for soil carbon sequestration interventions and to take advantage of nature-based climate solutions within their own corporate boundaries. Several companies have started pilot-testing the guidance in their supply chains and key lessons have emerged.

Lesson 1: Don’t be afraid to start

Many of the companies in this consortium set bold reduction targets without being sure exactly how — or if — they would meet them. They didn’t have complete emissions data from all suppliers; they weren’t sure what reductions would be inside versus beyond their boundaries — they had to be comfortable with uncertainty to get started.

Lesson 2: Collaborate with competitors

Yes, really. Companies agreed that it was better to sit down with their fiercest competitors to hash out solutions to their shared challenges than to go it alone and seek the glory of being the first. In many cases, collective action with competitors that share suppliers effects greater change than any one company could create alone. And figuring it all out with civil society participation means avoiding the risks of overclaiming.

Lesson 3: Share the benefits

A core conundrum of Scope 3 emissions is also a key way to create value. Scope 3 emissions are by definition shared through the value chain — suppliers, customers, partners, end consumers. But by cutting emissions upstream, all downstream participants can benefit from a lower carbon footprint. The key is to identify those who are incentivized to select more sustainable goods and services, and a virtuous circle begins.

World’s leading chocolate supplier: Carbon-positive by 2025

ValueChange working group member Barry Callebaut launched its ‘Forever Chocolate’ program to make sustainable chocolate the norm. It includes a goal to be carbon-positive, lift 500,000 cocoa farmers out of poverty, eradicate child labor from its supply chain and include only sustainable ingredients in its products — all by 2025.

This not only generates value for society in terms of a stable climate, poverty reduction and fair labor practices, it also future-proofs the business by helping ensure chocolate can still be grown decades from now.

As part of a multi-faceted approach to meet its sustainability goals, Barry Callebaut designed a program of supply chain interventions according to the ValueChange guidance to be implemented in countries that represent its most significant suppliers — including Cote d’Ivoire, Ghana, Cameroon, Brazil and Indonesia.

Nature-based carbon-removal activities

Planting new cocoa trees and replacing old or non-productive trees on farms
Planting non-cocoa trees on farms to increase carbon sequestration and support farmer income diversity
Planting non-cocoa trees in farming communities off-farm to increase climate resilience and carbon sequestration

Emissions-reduction projects

On top of carbon-removal activities, Barry Callebaut also disseminates and maintains cook stoves and solar home systems to supplier families, which provide multiple benefits to local communities in terms of health, gender equality and poverty reduction.

Verified results to date

Over 90,000 tons of CO2e reduced or sequestered
184,623 cocoa farmers lifted out of extreme poverty
Regeneration of 3,800 hectares of forest

The CO2e intensity per ton of product decreased by 12.8 percent compared to the previous fiscal year, of which value chain activities represent a significant portion. All these outcomes have been verified by SustainCERT, the official certification provider for Gold Standard.

Planned expansion

Barry Callebaut will expand the ValueChange pilot program to include improved agricultural practices, such as fertilizer management and ground cover crops; as well as disseminate improved cook stoves and other appliances. Together, these activities not only provide a measurable climate benefit, they also increase farm productivity, improve livelihoods, and enhance health and the general wellbeing of farmers who are already experiencing the effects of climate change.

The Barry Callebaut case study shows that reducing Scope 3 emissions makes business sense. Mars has also initiated a pilot project for a soil-smart wheat supply chain in Australia. The lower emissions factors that these companies can offer as a result of these verified interventions are valuable to downstream partners. Food & Beverage companies have expressed willingness to pay a premium for products, including chocolate, with a lower carbon intensity. Retailers likewise are motivated to stock low- or zero-carbon products to respond to their customers’ increasing expectations that they deal with sustainability issues on their behalf.

Next up: Apparel working group

Food & Beverage corporate working group members also included Adisseo, Bayer, Ben & Jerry’s, Cargill, Coop, General Mills, Hershey, Kellogg, L’Oréal, McDonald’s, Nespresso, Nestlé, Nutrien, PepsiCo, Syngenta and Veolia.

A new working group will focus on addressing the specific challenges for the Apparel industry. Companies including Levi Strauss, Nike, Target, VF Corporation and C&A have committed to the working group to dig into technical challenges including accounting at various supplier tiers, accounting for collective action; and, in this case, how GHG reductions should be communicated and allocated among collaborators.

Further working groups are considered for IT, Finance, Pulp & Paper and Transport, based on expressions of interest. Any companies looking to address these issues or can get in touch to explore opportunities to collaborate.

This work was supported with a grant from EIT Climate-KIC.