Carbon reporting isn’t exclusively tied to larger organisations with a turnover exceeding £36million.
The Kingfisher group, which includes B&Q and Screwfix, have set out their targets to achieve net-zero in collaboration with their supply chain.
But what does this mean for not only their supply chain, but for all businesses as we move to increased sustainability measures?
Scope 3 reporting is here to stay
The drive to net zero and reporting Scope 3 emissions is a strategy that can no longer live solely with large organisations with over 250 employees or a turnover greater than £36 million.
Large organisations are now demanding greater insight of their supply chain, often made up of SME’s, to have greater insights into the emissions being produced: demonstrated through the only internationally accepted method of reporting: Scope 3.
We have been closely following the evolution of Scope 3 reporting, as a freight forwarder and consultant, we have a unique viewpoint of the challenges throughout supply chains, whether it’s our business customers or logistics and freight partners. What is clear is how little is filtering through to SME’s on Scope 3 reporting and decarbonisation goals.
Although Scope 3 reporting is largely voluntary for SME’s, it is recognised that their contribution to Scope 3 emissions is significant, especially if we consider that SME’s make up 90% of businesses worldwide and are often suppliers to larger organisations.
According to the CDP (Carbon Disclosure Project) supply chain emissions are, on average, 11.4 times higher than operational emissions, more than double previous estimates.
Large organisations are therefore seeking to report and reduce their emissions throughout their supply chain, making it necessary for SME’s to report on Scope 3 to find a method to reduce their impact on the environment.
The latest evidence of this is by home improvement brand Kingfisher (parent group to the likes of B&Q) who are seeking clear sustainability targets by their vendors and supply chain:
- Kingfisher’s top 100 vendors, based on Scope 3 emissions, need to create a Science Based Targets initiative roadmap and decarbonisation target by 2028;
- The next 450 vendors are required to create an SBTi-aligned roadmap and decarbonisation goal by 2030; and
- All remaining vendors must set a climate reduction plan by 2030
Science-Based Target Initiatives
The SBTi is a global charity and corporate climate action organisation that develop standards, tools, and guidance for companies worldwide to play their part in combating the climate crisis. They are partners of CDP, UN, WWF, We mean Business Coalition and World Resources Institute.
Their challenge is to limit global warming to 1.5oC and prevent the worst effects of climate change.
As the name suggests, it utilises climate science to define and promote best practice in emissions reductions and net-zero targets. In 2021, the SBTi released their Corporate Net Zero Standard which is the world’s only framework for corporate net-zero target setting in line with climate science.
This framework supports both large organisations and SME’s to set net-zero targets. Fundamental elements to this are reduction of Scope 1 and 2 emissions as well as committing to measure and reduce their Scope 3 targets.
The SBTi offer valuable guidance to help with target setting for SME’s, click here to find out more.
Scope 3 Reporting
Scope 3 reporting is one of the most complex areas to measure and reduce, as these are activities often outside of the reporting organisations control and why Kingfisher is seeking collaboration with their supply chain.
In their recent press release Thierry Garnier, Kingfisher CEO, said:
“Like most retailers, Scope 3 makes up the vast majority of our emissions, and to drive these down effectively we need the collaboration of our entire supply chain. The response from our vendor partners has been very positive and we are grateful for their support as we work towards our shared goal to help tackle climate change. By coming together as an industry to take on this critical challenge, we can forge a path towards a future that is low-emissions, positive for our businesses and our planet.”
Collaboration that counts
For companies based in the UK who meet two or more of the following criteria; an annual turnover of £36 million, a yearly balance sheet of £18 million, and over 250 employees, the Streamlined Energy and Carbon Reporting (SECR) legislation dominates the carbon reporting landscape.
Currently, this includes
- Global Scope 1 & 2 GHG emissions,
- Global energy use for current reporting year
- Energy use and GHG data for the previous year
- At least one intensity ratio; e.g. emissions data such as CO2e per sales revenue or tonnes of Co2e per total square metres of floor space.
- Energy efficiency actions taken
- Methodology used.
Although Scope 3 is voluntary in the UK and EU it is advised and recommended that organisations report them, especially as they will greatly impact net-zero commitments. These commitments will not be achieved without the input from the Scope 3 insights through the supply chain.
It will take a collaborative effort to support SME’s to provide the information necessary. Organisations such as Kingfisher who are taking this approach will have greater insight and a greater opportunity to reduce emissions and even gain a competitive advantage.
Understanding all the latest changes to sustainability within logistics can be complex, that’s why we’re always simplifying these tricky topics in our articles. From CBAM to alternative fuels, click here to read our latest posts.
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