Sustainable action is not new. However, the increased recollection of this term in recent years has gained momentum. Sustainability in economic activity is no longer seen as contradictory to sustainability in the use of natural resources and the environment. While an individual or a household can adapt to current sustainability criteria in short term by changing their consumption behavior, this usually involves much more effort for companies. The decision to incorporate sustainability criteria into the strategic orientation of the company initially results both from legal requirements and from market-driven aspects. The customer with his demands on services and product is the driving element.
At the same time, more and more companies are opting for a long-term strategy based on sustainability for purely economic reasons – the basic consideration here, being that real sustainability in processes and production, always goes hand in hand with maximum efficiency in terms of overall costs.
The fact is that regulatory measures to price CO2 emissions are increasingly being pushed at national and international level. This now affects not only energy-intensive manufacturing sectors, but also the entire range of industrial manufacturing companies, and is even increasingly affecting service providers.
It is therefore of fundamental importance that every company gains clarity and transparency about how much CO2 is released along its own value chain.
Which emissions are relevant for CO2 pricing?
In general, a distinction is made between a company’s direct and indirect emissions. Scope 1 emissions are generally defined as direct emissions. These include, for example, combustion gases from the company’s own production or its own vehicle fleet. Sources that are directly controlled by the company.
Indirect Scope 2 emissions are caused by energy consumption associated with purchased energy (e.g., electricity, district heating). These emissions arise from the generation of energy that is purchased from outside.
To enable a holistic view of the entire value chain of a product, Scope 3 emissions must be included. For example, emissions from the production and transport of purchased materials, as well as waste disposal, are considered.
However, it takes time to completely change the supply chain operating model. For example, carbon neutrality (i.e., offsetting all CO2 emissions) can only apply if the entire chain achieves this status, which requires profound change and investment in both financial and time terms.
An equation with many unknown facts
So how do you deal with this risk in the short, medium and long term? What are your climate goals and your customers‘ climate goals?
Of course, it’s difficult to give a blanket answer to this question because there are a lot of unknown parameters involved. The measures that need to be taken in your company depend on the value chain of your products, including the sourcing countries, your raw materials and purchased parts.
What challenges do you face in this regard? How do you create the necessary transparency about your value chain on the one hand and at the same time about the possibilities to define and to raise not yet raised potentials in productivity and sustainability on the other hand?
We at ADCONIA are your partner to define goals and strategies for Scope 3 with you and to implement them in your company in a targeted manner.