How to Measure Your Supply Chain's Carbon Emissions October 2022

It’s almost Halloween and funnily enough, this puts me in mind of supply chain carbon emissions.

How? Why?

Some organisations I speak with view scope 3 emissions and supply chain carbon for purchased goods and services as ‘scary’, some view them as the ‘elephant in the room’, while others put them in the ‘too hard’ bucket. Whatever your metaphor, they are undeniably harder to quantify than your own emissions (scopes 1 and 2).

Unsure what we mean by scope 1, 2, and 3 emissions? We’ve got a handy explainer here.

But don’t fear!

There are well-established methods for estimating and calculating the carbon impact of the products you buy from your supply chain. If you’re serious about reducing the contribution of your supply chain to carbon emissions, using one or more of these is definitely needed to identify your priorities before you launch into action.

So, where do I start?

The Greenhouse Gas Protocol has a hierarchy for measuring scope 3 carbon emissions. It starts with so-called top-down, spend-based methods. These are a very clever way of assigning carbon emissions to the money we spend using macroeconomics and the flow of materials through the economy.

Simply put, the method provides conversion factors that say for every million pounds of money spent on a given product, X thousand tonnes of carbon are emitted. For example, 1,500 tCO₂e are emitted for every £1m spent on cement, lime and plaster products. Taking this route is appealing as all you need is your procurement team’s spend profile.

The method is great for getting a first-level calculation on the scale of supply chain emission – total tonnage – and also where the hotspots are – which products, materials, and services are the biggest culprits. But that’s where it stops. You can’t then use it to measure progress in reducing carbon emissions – the only way the carbon number goes down is if you spend less, which is unrealistic.

OK, so what do I do next?

To go to the next level, you need to change to a more detailed, bottom-up approach, focusing on the priority hotspots you identified above. These are inherently more detailed and more accurate, but take longer as they are predicated on the use of life cycle data.

Depending on the data available from your suppliers, there are a few options. At it’s simplest level, should your supplier not have their own information, you can use industry average information (secondary data) on the impact a given product or material has – industry conversion factors.

Combining this with your activity data, such as kilos of product bought, will give you a very good idea of the impact of your purchases. There are many databases available for this, such as the Bath Inventory of Carbon and Energy (ICE).

At the more accurate end of the spectrum, you can request life cycle information from your suppliers that is specific to their product, such as their own Environmental Product Declaration, not just a generic, market average.

Action Sustainability is doing just this for a Housing Developer for the second year running, supporting them with gathering and assessing supply chain data specifically on the goods and services they procure as part of their scope 3 calculations. It has been calculated that two-thirds of their overall carbon impact lies in the supply chain with the materials and works they buy. It is therefore a key part of their drive to Net Zero Carbon.

The process requires close engagement with the supply chain to understand what data they have available and, importantly, the quality and robustness of that data. This then allows us to calculate their emissions with a high level of accuracy. Moreover, it enables us to identify where carbon reductions could be put in place.

Where does this lead?

Clearly supply chain interactions are driven by your procurement and contracts management. It is therefore important to incorporate scope 3 considerations into your sustainable procurement strategy and processes to capture carbon data as you buy.

Want to know more about how to do this? Contact James at Action Sustainability.