Author: Elizabeth Geller

Elizabeth Geller is a Director on 3Degrees’ Energy and Climate Practice consulting team where she supports organizations around the world to reduce their greenhouse gas emissions and meet their climate goals.

Key Learnings from the 2023 GreenBiz Conference

, March 27, 2023

At the start of each year, the annual GreenBiz conference serves as an opportunity to set resolutions for the environmental work we plan to do in the year ahead. Some of the brightest minds from all sectors (including many students and young climate professionals) gather at GreenBiz to stand behind this effort and in doing so, share discoveries, developments and trends related to climate. 

Karlina Wu and Elizabeth Geller, members of 3Degrees’ Energy and Climate Practice team, at GreenBiz.

My colleagues and I from 3Degrees enjoyed meeting sustainability leaders from all over the country and were encouraged to see a diverse range of speakers representing different genders, ages, as well as ethnic and racial backgrounds at the conference. Hearing from a diverse range of voices on topics that impact how we mitigate climate change, including climate justice, is a critical step in aligning the overarching corporate community to keep global warming below the 1.5 degree Celsius target. Overall, the conference felt like an opportunity to build momentum that I hope to carry throughout the year. In this blog, I will share my top takeaways from the conference that touch on:

  • Supplier engagement strategies
  • Disclosure vs. action considerations 
  • Climate tech software opportunities

Carrots Fare Better Than Sticks in Supplier Engagement

When it comes to addressing scope 3 value chain emissions, collecting supplier-specific emissions data is preferred. This primary data provides the right amount of granularity and is typically the most accurate. To gather the necessary information from suppliers, an effective supplier engagement plan is essential to the overall emissions reduction strategy. At GreenBiz, we noted a cross-industry trend that engaging with suppliers using incentives has been yielding the best results.  

Negative repercussions for non-performance can lead to a feeling of ‘compliance fatigue’, a term I heard a few times at GreenBiz referring to laggard behavior that arises when the compliance stick is applied too much. Most organizations are taking the positive reinforcement or ‘carrot approach’ by extending rewards for encouraged actions. For example, public recognition for suppliers that set actionable climate goals or offering expertise and support to suppliers who are beyond the curve. 

Members from the sustainability teams of a major American clothing brand and a multinational fast food chain shared that incentives tend to be more successful for supplier action. The teams use preferential rates and favorable financing to reward their suppliers that demonstrate performance on sustainability metrics and to encourage continued exceptional behavior. We also learned about a new incentivization tactic at GreenBiz — the use of credit. For instance, a building materials company partners with its bank to provide loans to customers that purchase low-carbon cement. 

We also heard multiple anecdotal testimonies from suppliers, a construction equipment provider and a third-party warehouser, who are planning to offer lower carbon products / services to their entire customer base after a key customer provided a long-term commitment to justify their initial investment. Regardless of the perk, receiving extra credit for going beyond the minimal requirement encourages deeper emissions reductions work. 

 

Nearly 200 attendees packed into the room for the 3Degrees-hosted workshop titled “Bringing Scope 3 Emissions into Focus.”

 

Tension Between Action and Disclosure

While many of the GreenBiz sessions focused on emission reduction action, particularly within scope 3, few speakers could get through their sessions without mentioning the proposed U.S. Securities and Exchange Commissions (SEC) rule that could require publicly-listed companies to disclose their greenhouse gas (GHG) emissions. As it stands, the proposed SEC rule would require disclosure of scope 1 and 2 emissions, as well as scope 3 emissions if they are material to the organization or if the organization has a target covering scope 3 emissions. Many speakers and attendees acknowledged the SEC’s proposed ruling as a positive move towards industry transparency and accountability, but at the same time, it creates a strain on sustainability teams’ resources who are balancing both disclosure and emission reduction action. 

Multiple corporate organizations revealed that they already spend six months of every year on emissions accounting and disclosure. This left us to wonder if the time spent on accounting and disclosure is detracting from the time spent taking action to reduce emissions and if there should be more acceptance for ‘messy-yet-quantifiable’ data to start with.

For now, the answer to the later half of that question seems to be yes. During our scope 3 discussion panel, there was resounding recognition that scope 3 emissions accounting is a “high level directional guesstimate” intended to direct reporting organizations towards their most impactful emission reduction areas. The answer to the former part of our question depends on the organization, and it is clearly being tackled by a number of climate tech companies aiming to reduce time spent on emissions accounting and disclosure through streamlined software tools.

 

The half-day interactive workshop was a deep dive on the use of climate tech for scope 3 accounting and reduction.

 

Taking Advantage of Climate Tech Platforms

In her half-day scope 3 roundtable session, my colleague Karlina Wu discussed how organizations are leveraging climate tech software for streamlined emissions accounting and disclosure. Climate technology is becoming increasingly prevalent as the need for credible data intensifies, driven not only by the proposed SEC ruling but also pressure from investors, customers, and other stakeholders. These platforms offer GHG emissions accounting, tracking, reporting and analytics functionality, supplier data gathering, risk identification, and enterprise ESG compliance. In addition to their streamlined nature, the auditability of data is another key reason why organizations consider software solutions. 

At GreenBiz, we heard from numerous organizations that they are interested in these software tools but don’t know where to start. Many factors play into selecting technology for climate work, all related to the existing GHG inventory process. Organizations should consider the sources of data already being collected, the type of disclosure required to date, the climate goals that have been set, and their current supplier engagement strategy. For more insight into selecting and implementing climate tech, get in touch. 

The rundown on Reuters Transform Supply Chains USA Conference

, December 6, 2022

At nearly every conference that we have attended this year, our teams have heard about the complexities surrounding quantifying and addressing supply chain emissions. As we know supply chain emissions account for the lion’s share of a company’s total emissions (upwards of 90% in some cases), it was satisfying to attend an entire conference devoted to this topic. At the Reuters Transform Supply Chains USA conference, we dug into this very complicated challenge, shared learnings, and identified opportunities to better quantify and reduce emissions throughout the supply chain.

The first-ever Reuters Transform Supply Chains USA was held in Chicago and brought together over 250 supply chain and sustainability experts to explore cutting-edge methods for decarbonizing entire value chains across all sectors. Alongside two of my fellow colleagues, I journeyed to the Windy City to join in on the discussion. In two days time, we emerged with new potential partnerships, industry connections, and strategies to influence our teams’ efforts. Read along for a deep dive on the major themes we picked up on at the event.

Combatting Scope 3

ECP Director, Elizabeth Geller, participated in a panel on day two of Reuters Transform Supply Chains USA.

At the conference, I had the pleasure of participating in a panel titled “Decarbonizing the Supply Chain: Combatting the Challenge of Scope 3 Emissions” next to Chief Sustainability Officer of Conagra Brands, Katya Hantel. Our discussion centered around two main challenges of scope 3 emissions: how they are quantified and how they are reduced. 

I stressed that scope 3 emissions quantification and hot spot analysis is an iterative process – companies can start measuring emissions in a variety of ways, including the use of economic input-output tools, industry-wide emission factors, and supplier engagement. The key is to get started. We also discussed some of the drivers of action around addressing scope 3 emissions. Regulatory and investor pressure are motivators necessitating the collection of quantifiable, comprehensive data from all scopes of the supply chain. It’s becoming increasingly critical to leverage tools and frameworks to help organizations feel more confident in their emissions data.

There were nods to existing data collection platforms such as Ecovadis and the Sustainable Apparel Coalition’s Higg Index, which are widely used across the industry for access to supplier sustainability data, and discussion about new emission quantification platforms as well. There is excitement around the ability of climate management platforms to enhance data collection and improve the reliability, accuracy, and availability of scope 3 measurements. That being said, human-powered analysis from energy and climate professionals is essential to ensure these new and existing tools are being used accurately, help fill the data gaps, interpret highly technical emission factors, and apply the findings to organizations’ unique supply chains.

Our partnership with multiple climate tech software platforms makes GHG emission reduction services more accessible, across all three scopes of emissions. These platforms’ joint services provide granular emissions data, a precise understanding of each scope, and streamlined GHG emissions reporting. In addition to our partnerships, we also assist organizations in the selection of a climate tech software solution that works best for them. In studying the ecosystem of leading software solutions, we look for a number of foundational requirements, including integrations, market positioning, audit-ability, and emissions reduction planning. 

With over 100 climate-related software solutions to optimize the accounting and reporting process, it is challenging to know which to select and where to begin. We can assist in exploring available tools, making a best-fit selection, and then onboarding the right piece of technology for your business. 

Looking beyond emission quantification, another important topic that I discussed during the panel was scope 3 emission reduction strategy. Organizations looking at getting started on scope 3 emissions reductions can consider the following four strategies:

  • Internal policy innovation (e.g. business travel policies)
  • Product design innovation (e.g. making design changes to reduce emissions from customer product use)
  • Customer engagement (e.g. buy-back programs)
  • Supplier engagement (e.g. educating suppliers on renewable energy procurement or other emission reduction projects) 

The 3Degrees team at Reuters Transform Supply Chains USA Conference in Chicago.

Supplier Engagement

Supplier engagement strategies were a recurring theme at the conference. Corporates are mostly engaging with tier 1 (those that supply the company directly) and tier 2 (direct suppliers to their tier 1) suppliers, and that traceability down to the lower tier suppliers will likely become a requirement in coming years. Effective supplier engagement programs are typically geared toward suppliers with a high emissions impact or those that make up a sizable portion of the company’s spend. Many organizations discussed feedback received from their suppliers, which uncovered a need for uniformity in requesting supply chain data and support in providing emission reduction strategies. 

Across industries, supplier energy usage is a major scope 3 hotspot and a tangible area for supplier engagement. It’s important to understand how much electricity suppliers use to manufacture purchased products and the grid emission factor for that region. In addressing this area of emissions, companies can provide suppliers with educational materials for quantifying emissions, setting science-based targets, and procuring renewable energy that is available locally.

Another supplier engagement starting point discussed at the conference was related to companies that purchase animal products. Suppliers of beef or dairy can reduce emissions by changing manure management practices to reduce methane or changing grazing practices to increase soil carbon sequestration. Approaches such as these can significantly reduce supplier operational emissions and ultimately result in a revised supplier-specific emission factor for the sourcing brand. Our Carbon Markets team works with farms and ranchers on the ground to set up projects, monitor progress, and help brands with claims guidance surrounding the projects’ emissions reductions.

How We Help

There is a reason scope 3 gets a lot of attention—it is the least understood source of emissions and the most challenging to address. Despite this, organizations shouldn’t be afraid to dig into this portion of their business’ operational activity. 3Degrees can help your organization calculate a greenhouse gas emissions inventory, select a greenhouse gas emissions quantification software, manage scope 3 data, design a supplier engagement strategy that’s right for your organization, and engage with suppliers to reduce emissions in your supply chain. 

If you’re interested in better understanding your organization’s scope 3 footprint, or for guidance in the complex process of greenhouse gas reduction, please get in touch today.

What you need to know about the first net-zero standard

, November 11, 2021

In late October, after more than a year of anticipation, the Science Based Targets Initiative (SBTi) released the world’s first net-zero standard (the SBTi Net-Zero Standard). This is exciting news for many organizations who have been awaiting additional guidance as they consider their own climate action plans, and we applaud SBTi for this publication. In this blog, we’ll provide a brief summary of the SBTi Net-Zero Standard’s key components, discuss the significance of its publication, and highlight a few areas where there is remaining work ahead in the broader net-zero space. 

Key Components of the SBTi Net-Zero Standard

The SBTi Net-Zero Standard offers stakeholder-driven consensus on key pillars of a net-zero goal, which are outlined in the table below.

Component SBTi Net-Zero Standard Details 
Definition of net-zero Reducing Scope 1, 2, and 3 emissions to zero or to a residual level that is consistent with reaching net-zero emissions at the global or sector level in eligible 1.5°C-aligned pathways, then neutralizing any residual emissions in the net-zero target year and any greenhouse gas (GHG) emissions released into the atmosphere thereafter.
Required targets Organizations must set and meet the following targets as part of an SBTi-validated net-zero goal: 

  • Near-term targets, which must be achieved within five to ten years and encompass 95% of an organization’s Scope 1 and 2 emissions. At least 67% of Scope 3 emissions must be included, as well, if an organization’s Scope 3 emissions are greater than 40% of total emissions. Depending on the timeframe and level of ambition selected, emissions must be reduced by 2.5 to 4.2% per year. 
  • Long-term targets, which must be achieved by 2050 or earlier and encompass 95% of an organization’s Scopes 1, 2, and 3 emissions. Most organizations will need to reduce 90% of their total base year emissions.

It’s important to note that SBTi’s Net-Zero Standard does not permit the use of carbon credits (also known as offsets) in any form to meet either near-term or long-term targets. See below for further information about the recommended uses of carbon credits. 
Required neutralization After an organization meets its long-term target, to be considered “net-zero” it must neutralize remaining carbon emissions (also called “residual emissions”) with permanent carbon removals, including in the form of carbon credits.
Recommended actions beyond value chain mitigation  SBTi recommends that organizations: 

  • Invest in emissions reductions and removals outside of an organization’s direct and indirect footprint (which SBTi terms “beyond value chain mitigation”). SBTi will be developing further guidance throughout 2022 but advises priority focus on securing and enhancing carbon sinks in the near term. 
  • Disclose neutralization milestones such as near-term investments in removals technologies that show commitments towards neutralizing unabated emissions once long-term targets are achieved. 

 

Significance of the SBTi Net-Zero Standard

Publication of the SBTi Net-Zero Standard is a significant step forward in the comprehensive effort to limit global temperature rise to 1.5oC for three reasons. 

First, the standard provides a much-needed unifying definition of the term “net-zero” for the private sector. As a global collaboration between CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature, the SBTi has strong authority in the climate space to put forward a definition that will directly impact how organizations approach their climate and sustainability strategies. By providing a definition that offers needed goalposts for the journey to net-zero, SBTi begins to alleviate the painful “open to interpretation” definition that presided over the private sector. 

Second, the standard clearly outlines the level of ambition needed from organizations to align with global net-zero. Developing plans to meet a 2050 goal is unprecedented for many organizations, and ensuring those plans enable emission reductions in line with limiting global temperature rise to 1.5oC will require thoughtful leadership and tactical action. While SBTi does not provide a playbook for how organizations can achieve these emission reductions, the SBTi Net-Zero Standard is clear on the magnitude of emission reductions that are required through near-term and long-term targets. SBTi seems to purposefully delegate the creative and strategic implementation planning required to achieve these targets to the sectors and organizations themselves. 

Finally, the SBTi Net-Zero Standard sends the clear message that the first priority for any organization looking to meet a net-zero goal is absolute emissions reduction. SBTi provides concrete guidance that most organizations will need to reduce their emissions by 90% to meet a long-term target as part of reaching net-zero. While SBTi does encourage organizations to show climate leadership by pursuing investments in emissions mitigation and climate innovation beyond their value chain, the new standard does not provide detailed guidance on technology choices, volumes, and implementation timelines. Publishing the first version of the standard while stakeholders are still assessing the role of beyond value chain interventions is further indication from SBTi that absolute emissions reductions cannot wait.

Remaining Work Ahead

While the SBTi Net-Zero Standard aligns organizations in a single direction for net-zero by mid-century, guidance for the private sector is not entirely complete as several important open questions remain. Specifically, organizations are seeking further guidance today on the appropriate role of climate investments to complement their absolute reduction targets and protocols for rapidly growing organizations to align with net-zero.

Investments in emissions reductions and removals outside of an organization’s value chain represent an impactful tool to achieve real and measurable greenhouse gas reductions. SBTi encourages organizations seeking to increase climate ambition to pursue these investments, and an SBTi co-founder has included it as a key way companies can ensure their net-zero targets are credible. However, the current standard does not offer detailed guidance on how these activities should be incorporated into a larger strategy that complements near- and long-term reduction targets.

“Decarbonizing a company’s value chain in line with science and reaching net-zero emissions by 2050 is increasingly becoming the minimum societal expectation on companies. Businesses can play a critical role in accelerating the net-zero transition and in addressing the ecological crisis by investing in mitigation actions beyond their value chains.” – SBTi Net-Zero Standard

As more organizations seek opportunities for near-term climate action, stakeholder-driven initiatives and standards can play a critical role in guiding the private sector on how best to align additional investments with net-zero goals. In the near-term, existing carbon credit protocols offer a comprehensive blueprint for how to quantify and verify greenhouse gas reductions. Additional initiatives, like the Taskforce on Scaling the Voluntary Carbon Market, are underway to ensure this market is set up to deliver continued impact over the next decades. For carbon removals, guidance on how to integrate these projects into net-zero aligned strategies–including how to vet emerging technologies and protocols, and appropriate volumes and timelines for implementing these additional investments–will go a long way in driving corporate action. 

Another key area for development within the net-zero space is accessibility for climate-conscious, high-growth organizations. Many growing organizations are eager to root their growth in climate-committed foundations, but cannot practically implement a net-zero framework that requires absolute emission reductions prior to executing their growth plans. Growing organizations require a unique approach to target-setting that recognizes the important role they play in developing the innovative approaches and technologies needed to achieve net-zero, without allowing unfettered growth in emissions. Such a framework could, among other things, recognize when an organization’s growth results in decreased market share for higher-emitting competitors. In the absence of such a framework, rapidly growing organizations are unable to receive the appropriate  level of recognition for climate action compared to steady state organizations that reduce their emissions from a clearly established baseline. 

While standard-setting organizations continue working to drive industry-wide consensus on net-zero-aligned carbon credit investments and pathways for rapidly growing organizations to meet net-zero, 3Degrees will continue to work closely with our clients to develop impactful climate solutions that fit each organization’s unique circumstances and needs.

No matter where an organization may be on its climate journey, there are critical steps that every organization can take to address its climate impact: quantify their emissions, set reduction targets, implement emission reduction projects, and pursue opportunities to maximize their climate impact beyond their value chain.

If you have questions about the SBTi Net-Zero Standard, or are interested in support to accelerate your energy and climate strategy, feel free to reach out to us. We’re happy to help.