Supply chain footprinting is about to take a step forward

Jan. 11, 2011 - PRLog -- If you have anything to do with managing a business with a significant supply chain, here's your chance to get up to speed. The long-awaited launch of guidance for managing network and product lifecycle impacts is happening soon…

Carbon footprinting set out in 2001, when the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) established the GHG Protocol Corporate Standard, which delineated a practical way to quantify the greenhouse gas (GHG) emissions produced from materials and energy use in business operations.

The GHG Protocol Corporate Standard did this by offering an accounting framework with three GHG emissions "scopes:" Scope 1 is a sum of GHG emissions from fuel, refrigerants, industrial gases, and other materials combusted or used at sites the company owns or controls; Scope 2 adds up GHG emissions linked to electricity used by those facilities; and Scope 3 encompasses all other GHG emissions in the business supply chain.

Whereas the measurement of the "operational" carbon emissions of scopes 1 and 2 has always been straightforward and rapidly adopted, with a significant majority of the Global 500 companies report on operational carbon emissions, Scope 3, however, has incited many debates over interpretation.

Scope 3 outlined a much larger and more complex set of issues than those that characterize GHG emissions from internal operations. It originally referred to GHG emissions from supply chains, including products, waste, distribution, and travel. While Scope 3 reporting has been growing, companies have been clamoring for more detailed guidance. But, there has not been a common language for measuring Scope 3 impacts in detail across industries, and this is about to change soon.

By summer 2011, WRI and WBCSD will finalize the Scope 3 Standard and the related Product standard as a result of a three-year project involving more than 1,500 diverse stakeholders from governments, research institutions, businesses, and civil society, all contributing to various discussions and drafts.

In an interview with Greenbiz, Pankaj Bhatia, Director of the GHG Protocol at WRI, said that Scope 3 will enable companies to develop an organized understanding of the impacts, risks, opportunities, and considerations from energy and other sources of GHG emissions throughout business networks and relationships.

As a comprehensive accounting and reporting framework, Scope 3 standard will facilitate identifying GHG reduction opportunities, setting carbon reduction targets, and tracking performance in supply chains. In turn, it will provide a sophisticated framework for reporting to the Carbon Disclosure Project and the Securities and Exchange Commission, in annual CSR reports, and for other GHG transparency programs and B2B initiatives.

Additionally, Scope 3 also may lead companies to develop stronger relationships with suppliers by reducing waste and improving efficiency through GHG management in their supply chains. Companies may utilize this information to change their procurement practices or improve product design or product efficiency, resulting in reduced energy use.

The Scope 3 standard is written for companies of all sizes in all economic sectors. It is especially applicable to three types of companies: (1) those with significant carbon emissions in their upstream or downstream activities, (2) those that would like to engage and inform their stakeholders about their supply chain carbon emissions and performance, and (3) those wanting to identify business risks and opportunities in their supply chain and develop strategies to minimize risks and leverage opportunities.

Scope 3 carbon emissions are now categorized into 15 distinct, mutually exclusive categories that avoid double counting, and are intended to provide companies with a systematic framework to organize, understand, and report on the diversity of Scope 3 activities within a corporate supply chain.

While the Scope 3 standard won't provide a robust way to directly compare GHG performance between companies, it will let a company measure performance against its own baseline, which potentially could be compared between companies. Scope 3 standard provides a platform that creates unified language across industries for going deeper on comparisons of key applications through development of sector-specific rules.

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