Menigo: How to manage Scope 3 emissions and engage suppliers
Menigo, the Sysco subsidiary in the Nordics, established itself as a Scope 3 emissions pioneer, moving forward from what the majority of wholesalers, distributors, and grocers are struggling with: Product Climate Footprints for purchased goods and services and a supplier engagement roadmap.
We spoke with Christoffer Carlsmose, Head of Corporate Sustainability at Menigo and leader of the Scope 3 project, to find answers to a burning question of an entire industry: How?
And so we did – from problem and solution identification to strategy, roadmap, and actions.
How to: Reach climate neutrality and win more business
Perhaps in the perception of the industry, 2030 seems still far away, perhaps for some companies a climate neutrality goal is just that: a goal. For Menigo, it is a core business and a financial opportunity. Christoffer tells us how Scope 3 emissions started to become a focus issue for Menigo.
Our company having Science-Based Targets went a long way because it comes with requirements to input data in a certain way.
Menigo has the climate neutrality goal that is our highest or most important goal within sustainable targets, where we have a number of other goals supporting this. Also, customers, especially from the public sector, started asking climate footprint questions more frequently. They need climate footprints on the article level and it started coming up as a requirement in tenders
Keeping the eyes on the prize and having a broad understanding of the overall footprint led to Menigo’s increased aptitude to tackle the majority of emissions in food: Scope 3. Christoffer explains:
We had an overview of our Scope 1,2,3 but we have been aware of the need to calculate and understand the footprints of our food commodities -the Purchased goods and services category- for quite some time. The nature of our business also demands it. We work with logistics and food that create a huge footprint – 77% of our total climate footprint is the food commodities and to reach our goal of climate neutrality, we need a higher level of data than other businesses.
We needed to find a solution to monitor, understand, and work actively with Scope 3 emissions reductions, particularly Purchased goods and services. This solution should enable us to work actively with our suppliers as well as our customers, because if they reduce their scope 3 footprints, our scope 3 footprint will be reduced too.
I was never really impressed with the database + spreadsheet method. I thought, there must be something more modern, something more frequently updated than just once a year. So, we have been looking into how to do this the right way.
Calculate Scope 3 emissions the right way
At this point, we were intrigued to ask Christoffer: Is there a right way and what is it for you? Christoffer aptly responded:
The right way covers the existing and upcoming FLAG requirements. We have science-based targets within the company, which account for all parameters in the climate footprint calculations. The right way also has an element of risk management in the calculations. I've seen multiple times companies working with Scope 3 emissions and doing the right things until something goes wrong in the historical calculations and a simple calculation mistake turns into greenwashing publicity.
I started investigating the market a few years ago and I found CarbonCloud to be the best-in-class solution globally – I have yet to see a solution that matches CarbonCloud’s way of working with Scope 3 emissions. Risk mitigation is another great advantage of CarbonCloud: Any historical changes to the calculation of a footprint, any changes can be backtracked so the process is covered.
How to: Initiate a Scope 3 strategy
Some weeks went by and Menigo now has a climate footprint for every article of their assortment. But data without an action plan is just numbers – Data with an action plan is a predictable path to positive change. And Menigo’s action plan on Scope 3 emissions is pure inspiration.
We have calculated our full assortment with CarbonCloud and now we have to interact with our suppliers to get them onboard with the platform. To start with, we will educate our merchandising team so they can share the message with their product categories and it will be different across the product categories. Some merchandisers will put that message out to 5 giants and some to 100 suppliers – emails won’t do the trick. Together with CarbonCloud, we have found an effective for both cases but the message to enhance the footprint accuracy still needs to come from us.
Enter: Suppliers – The most vital part of a successful Scope 3 strategy. When a change is introduced in a network, some resistance is to be expected. However, Christoffer has some perspective-altering words and arguments.
What I heard from some suppliers in early discussions was a concern that this would be another task on top of the audits they are already part of and the existing workload around reporting. Someone told me “If we sit in front of the computer all the time, we won’t have any products to sell you!” and I replied “this is exactly why we are doing this – so you can have less of this work!” We have the footprint of their products already, they can simply refine it to better reflect their work.
How to: Engage suppliers – The Menigo way
During our conversation with Christoffer, one aspect became abundantly clear: His profound knowledge of change management and digital transformation. This is reflected in his supplier engagement approach as well. Christoffer built Menigo’s supplier engagement on the company’s strengths, the most effective avenues for added value, and triple-win conditions. Christoffer outlines them for us:
Many people would think to change suppliers immediately, but this is not where the climate win is. If we change suppliers, the old supplier will sell their products to someone else and the climate footprint surplus will keep being emitted. The real win for the climate is to be able to tell our supplier that the emissions surplus compared to the other product comes from, for example, packaging. They can work on reducing it, match the climate footprint of the competing product, and reduce emissions that would otherwise go to the atmosphere. This creates a real value in reducing the global footprint.
As Christoffer explained, incentivizing existing suppliers is more of a win for the climate than changing them. And here is the win and added value for them:
Within food, the relationships with suppliers are long and an important opportunity, especially at times like this when the supply chain is disrupted and we need to be prioritized when the volumes are low. At Menigo, we have great relationships with our suppliers and CarbonCloud helps us with this. When, for example, we compare a supplier’s product with a similar product with the same price and quality parameters from a non-supplier but the compared product has a 25% lower climate footprint, we can inform our suppliers where the additional emissions come from.
Maintaining a good relationship with our suppliers means giving them time to change: It needs to be a reasonable time span to implement the change efficiently in a financially responsible way for them. We are setting up the plan to do this together and, in the meantime, we commit to continue buying from them.
How to: Turn the climate crisis into a business opportunity
Looking not too far ahead and with the right insights at hand, Menigo will have an opportunity when others will be having pains. When the climate disclosure mandates come into effect in a couple of years, Menigo will be actively and systematically tackling a global business issue and reporting progress when many companies will be composing baselines.
Soon the product climate footprint will be normalized and a competitive advantage for our suppliers, but it is going to be a journey. Sweden had a similar change in the price tag in the recent past, to show the price of a kilo of product and allow for comparisons. I think product climate footprints will have the same journey, so in a few years everyone will know what a reasonable, high, or low footprint is for this product.
There is another important factor in this. With CSRD and other mandatory climate disclosures all companies will need to understand their Scope 1, 2, 3 footprints and a lot of questions about product climate footprints will pop up in the market then. These companies will need to do what we did 2 years ago: A screening, a baseline, data collection, etc. But we want to go beyond just reporting and actively work with our emissions. We want to have emissions data on a dashboard, have monthly meetings, assess how are categories and products performing over time, and work with our purchasers to reduce our scope 3 emissions so that they can take the credit for it!
We live for the day where emissions metrics are a business-as-usual, monthly assessed KPI on par with financial success. And we don’t have to wait that long – Menigo’s status is Green: On track. Wholesalers, distributors, and grocers who start today will be ready too.