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May 9, 2022 by Edward Blomstedt

How has carbon footprint measuring changed supply chains?

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Well, they have just only started to change them.

Supply chains are the most powerful tool to curb carbon emissions. Instead of waiting for new regulations, companies now need to lead the transition even more towards a low carbon economy.

That is why companies need to look at reducing emissions right away. Because if they don´t do it, their customers surely will.

And the supply chain is the right place to start looking.

To be honest, supply chains very often account for the biggest share of a company’s emissions, but very few companies actually measure their supply chain carbon emissions.

According to the GHG Protocol, corporate emissions are categorised into three main groups:

Scope 1: direct emissions generated by owned or controlled resources. These are the emissions that a company generates while performing its business activities. In most cases, scope 1 emissions are generated by the fuel combustion that powers industrial processes or the vehicle fleet.

Scope 2: indirect emissions generated by the production of purchased electricity, steam, heating and cooling. These emissions are not generated by the company directly, but by the utilities that produce electricity, steam, heating and cooling.

Scope 3: all other indirect emissions that occur in a company’s value chain. Scope 3 emissions are generated by resources not owned or controlled by the company, but that the company indirectly impacts in its value chain.

Scope 3 emissions are also called supply chain emissions, because they take into consideration the carbon footprint generated by a company’s suppliers.

Due to a tendency to specialize and outsource non-core activities, supply chain emissions account for around 90% of companies’ carbon footprint. And this number may rise in the future.

So companies have the power to shape the future of our planet. But why should they measure supply chain emissions and act upon them, if they are not required to do so?

Well supply chains are key to reverse climate change. And, as said before, though supply chains often account for the biggest share of a company’s emissions, very few companies measure their supply chain carbon emissions.

For listed companies, it is not yet legally mandatory to disclose the greenhouse gas emissions generated in the supply chain but the market demand is already turning towards this ahead of the legal frameworks. But calculating a full carbon footprint will be a heavy time burden on any company and requires very specific data, two things most companies don’t have.

But new, innovative technologies calculate a full carbon footprint in a tenth of the time, and they only need basic financial data. Unfortunately, too many companies are not aware of these solutions. And these innovative, digitally based technologies, are the way to get a transparent view on the carbon footprint.

Many companies will in the future be stuck between two powerful forces, the customers and regulations, fully capable of creating success stories on one hand, or on the other hand punishing companies not adapting to a greener future.

And isn’t this is a good reason to adapt some new technologies and to be a frontrunner?

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