As the world becomes more conscious of environmental impact, businesses are under increasing pressure to manage and report their carbon emissions. Scope 1 and Scope 2 emissions, are relatively straightforward for most companies to track. However, Scope 3 emissions data are more elusive and complex. These emissions typically account for the majority of a company’s carbon footprint, making them a critical part of any serious climate strategy.
In this article, we will discuss why it’s important to engage suppliers in collecting scope 3 data and how you can go about it.
The complexity of Scope 3 emissions
Scope 3 emissions cover a wide range of activities, including the production of goods and services, transportation, waste generation, and more. In the retail sector, much of the carbon footprint is tied to the products they sell, which means it’s spread across a vast and intricate network of suppliers, manufacturers, and logistics providers. This is particularly true in the food industry, where Scope 3 emissions can contribute up to 70-90% of a company’s total carbon footprint.
The complexity of food supply chains, along with the diverse food production methods—from agriculture to processing and distribution—adds to the difficulty of gathering accurate emissions data. Accurately calculating these emissions with precision requires input data that is often difficult to obtain, making it even more challenging to calculate Scope 3 emissions. Traditionally, many businesses have attempted to gather Scope 3 emissions data manually, relying on emails, spreadsheets, and surveys. This approach, while well-intentioned, often leads to incomplete or outdated data. Suppliers may struggle to track their own emissions accurately, leading to gaps in information that cascade down the supply chain. The result is fragmented data that lacks the granularity needed to guide meaningful action toward carbon reduction.
💻 Need a refresher? Read our guide on Scopes 1, 2, and 3 emissions.
Why supplier engagement is key
To gather reliable Scope 3 emissions data, retailers must collaborate closely with their suppliers. Here’s why supplier engagement is crucial:
1. Data accuracy and granularity
Suppliers are the closest to the production processes that generate emissions. They have access to the most accurate information regarding the carbon footprint of raw materials, manufacturing methods, and transportation logistics. Engaging suppliers to take ownership of their part of the emissions data ensures that the information collected is more precise and detailed.
For example, platforms like CarbonCloud offer solutions that automate the process of requesting climate footprints from suppliers. Rather than relying on static, manually collected data, suppliers can provide primary data that reflects current production methods. This data can then be aggregated to offer a comprehensive view of the retailer’s Scope 3 emissions, without the need for constant back-and-forth communication through emails and manual calculations using spreadsheets.
📊 Read more about our tips on getting Scope 3 data, including how to overcome the roadblocks in data collection
2. Increased efficiency through digital infrastructure
Manual methods of gathering Scope 3 data are not only prone to error but are also time-consuming. Retailers often find themselves chasing down suppliers for updates or trying to reconcile different data formats and reporting standards. Digital infrastructure, as demonstrated by social networks, has already proven that connectivity between various actors in a system can be seamless. Applying this same logic to food supply chain emissions data can simplify the process dramatically.
By engaging suppliers on digital platforms, data collection becomes more streamlined and automatic. Suppliers can provide their emissions data, which is then instantly updated within the retailer’s system. This minimizes delays and ensures that data remains up to date, a critical factor when producing sustainability reports or responding to financial disclosures that require accurate emissions metrics.
💡 How can digital network solves Scope 3 data?
The challenge of Scope 3 emissions is rooted in a connectivity issue, with a clear and effective solution: a digital network. This network allows stakeholders across the food system to connect digitally on a platform, facilitating the seamless exchange of crucial emissions data, specifically the climate footprint of each commodity.
The best part? This can be done automatically.
3. Incentivizing improvement and innovation
Once retailers have mapped their Scope 3 emissions, they can identify areas where emissions reductions would have the greatest impact. Engaging with suppliers offers an opportunity to incentivize them to improve their own carbon performance. Retailers can reward suppliers who make significant efforts in reducing their emissions by continuing to procure from them or by offering premium contracts.
For example, a retailer could choose to source more climate-smart products or ingredients from suppliers that demonstrate low emissions or invest in more sustainable practices. By engaging suppliers in the emissions reporting process, retailers not only improve the quality of their data but also drive meaningful improvements across their supply chain.
4. Creating accountability and ownership
When retailers actively engage their suppliers in the data collection process, it fosters a sense of accountability and ownership among suppliers. Suppliers are no longer passive participants but active stakeholders in the emissions reduction process. With platforms like CarbonCloud, suppliers are encouraged to take control of their part of the emissions calculations, improving data transparency and fostering collaboration across the supply chain.
Retailers that empower their suppliers to take responsibility for their own emissions data create a more robust, transparent supply chain. This is particularly valuable in today’s business climate, where both consumers and investors are demanding greater transparency and accountability regarding corporate sustainability efforts.
5. Aligning with climate ambitions and reporting requirements
Retailers’ ability to set and meet Scope 3 emissions targets depends significantly on the cooperation and performance of their suppliers. Without supplier engagement, it becomes nearly impossible to align supply chain emissions with the retailer’s climate goals. Engaging suppliers allows retailers to create a more comprehensive emissions map, one that stretches across all tiers of the supply chain.
Moreover, increasing pressure from financial disclosures, such as those required by the Task Force on Climate-related Financial Disclosures (TCFD), demands retailers not only collect but actively report their Scope 3 data. With harmonized, real-time data from suppliers, retailers can confidently report on their emissions reduction efforts and demonstrate progress toward their climate goals.
Conclusion: A collaborative effort
Scope 3 emissions represent the largest portion of a retailer’s carbon footprint, and for food companies, they can make up as much as 70-90% of their total emissions. The complexity of food supply chains and diverse production methods makes collecting accurate data for these emissions a challenge that can only be addressed through close collaboration with suppliers. By engaging suppliers through digital platforms and incentivizing them to take ownership of their emissions data, retailers can not only improve the granularity and accuracy of their Scope 3 data but also drive meaningful reductions in carbon emissions across their entire supply chain.
In the journey toward more sustainable retail operations, engaging suppliers is not just a best practice—it’s an essential step. As more companies commit to reducing their environmental impact, the retailers that prioritize supplier engagement will be best positioned to meet both regulatory requirements and customer expectations.
In the journey toward more sustainable retail operations, engaging suppliers is not just a best practice—it’s an essential step. As more companies commit to reducing their environmental impact, the retailers that prioritize supplier engagement will be best positioned to meet both regulatory requirements and customer expectations.
Want to engage your suppliers for better Scope 3 data?
Get in touch with us to see how you can do this in an easy way.
