The Climate Of Business #129: Reducing methane, Typhoon Gaemi, US renewable energy capacity, Hydrogen in Germany, suppliers reducing Scope 3

Climate Change Reality

• A Drug for Cows Could Curb Methane Emissions from Meat and Dairy (Bloomberg)
• In the Developing Field of Climate Psychology, ‘Eco-Anxiety’ Is a Rational Response (Inside Climate News)
• Typhoon Gaemi: Everything we know about the strongest storm to hit Taiwan in eight years (The Independent)

• Wildlife enthusiasts called on to help record dolphins and whales on UK coast (The Guardian)
• Climate change is making the monsoon more dangerous (The Economist)
• What the Temperature Doesn’t Tell You About Extreme Heat’s Hazards (Bloomberg)
• To Help Stop Malaria’s Spread, CDC Researchers Create a Test to Find a Mosquito That Is Flourishing Thanks to Climate Change (Inside Climate News )
• Tree bark plays vital role in removing methane from atmosphere, study finds (The Guardian)

Business Climate Reality

• Italy to present hydrogen corridor plan in autumn, may involve Switzerland (Euractiv)?
• Von der Leyen will face challenge to achieve gender balance in next Commission team (Euractiv)?
• The top US states for renewable power generation capacity (Reuters)?
• Britain's GB Energy to work with Crown Estate on clean energy projects (Reuters )
• Explainer: How Germany's hydrogen economy could transform energy use (Reuters)

• German government must do more to tackle air pollution, court rules (Reuters)
• UK Unveils $10 Billion Clean Energy Development Initiative (ESG News)

Reality Check

Emissions generated in the value chain often constitute a significant portion of a company’s overall GHG emissions. By actively engaging with suppliers, companies can address these emissions beyond their direct control. Such collaborative efforts significantly reduce the risks associated with isolated endeavours and facilitate the sharing of best practices, technologies, and innovations to reduce emissions and achieve climate goals. Accordingly, this weeks newsletter will dive into supplier engagement and how businesses can get started to foster a collaboration that can lead to the development of new, more sustainable products and processes that neither party could achieve alone.

What is supplier engagement?

Every company that has embarked on the journey of GHG emissions calculation and decarbonisation will find it a huge challenge to estimate Scope 3-category 1 accurately and with sufficient granular and reliable data needed for decarbonisation and monitoring progress. Engaging suppliers helps companies gain visibility into where emissions are generated outside their direct operations and start gathering reliable data in a structured and scalable process. By working closely with suppliers, companies can encourage the adoption of standardised methods for data collection, ensuring the consistency and reliability of the emissions data reported.?

Benefits of engaging suppliers on the sustainability journey

More broadly, engaging suppliers may help to align their operations with the company's long-term sustainability goals, not only in GHG emissions but also in other environmental and social goals (i.e. as required by the CSRD regulation and the ESRS standards). Engaging suppliers via a formal process pushes suppliers to measure, report, and disclose their emissions and other sustainability data. This transparency is critical for tracking progress and accurate reporting. Meanwhile, understanding suppliers' GHG emissions and other sustainability data helps identify potential risks related to supply chain disruptions, non-compliance with sustainability regulations and reputational damage.

Proactive supplier engagement demonstrates a company’s commitment to sustainability, enhancing its reputation among consumers, investors, and other stakeholders. Transparent and responsible supply chain management contributes to stronger supplier relationships while improving credibility with stakeholders, including customers, employees, and investors.

Furthermore, supplier engagement allows companies to:

• Collect reliable data from suppliers in an organised and replicable manner.
• Identify opportunities for emission reductions that may not be obvious without a comprehensive understanding of the entire supply chain (examples can include joint efforts to improve efficiency, switch to renewable energy sources, or redesign products for reduced environmental impact).
• Set coordinated efforts and targets between the reporting company and its suppliers to invest together, share and minimise risks, and report progress collectively without greenwashing or double-counting.

How to get started with supplier engagement?

When getting started on supplier engagement, it is essential that businesses ensure they are adequately equipped to over come the varied challenges and barriers to supply chain decarbonisation. These challenges and barriers vary widely but are very much dependent on the complexity and length of a company's value chain, identification of the correct data and a process to collect this data in an operable and scalable manner, and finally, the ability of the reporting company to influence decisions of its suppliers. Notably, collecting data and collaborating with suppliers for emission reduction have been consistently reported by companies as one of the main pain points in managing emissions in general and reducing Scope 3 emissions specifically.?

While every company must create and adapt its internal processes to their requirements and resources, some best practices and tips can be used as guidance for to mitigate the above challenges and starting the creation and implementation of a supplier engagement process. Below is a short summary based on Plan A's experience assisting their customers in managing Scope 3 emissions, and a review of existing state-of-the-art literature, of what a company can do to reach impactful decarbonisation across the supply chain.?

1. Screening: Before initiating a supplier engagement program, you should have finalised your corporate carbon footprint (CCF). Therefore, you already know the relative importance of your Scope 3 emissions within your whole CCF. In addition, your company has probably estimated the emissions in the value chain using spend data. This is the first recommended step and it is beneficial to screen the most relevant suppliers regarding spend and GHG emissions.?

2. Plan: The second step consists of identifying the top supply categories (e.g., specific categories of physical products, services, cloud & IT, consultancy services, etc.) and top suppliers based on spend and their contribution to supply chain emissions. This identification will allow you to classify the supply categories and suppliers into hierarchies, which will be used in the following steps to prioritise the implementation of the supplier engagement programme, focusing on the more relevant suppliers and where there are more opportunities to reduce emissions.?

3. Engage: The next step involves engaging with a strategic sample of your top contributors to obtain the required data input (e.g. via a survey) and accurately measuring their contribution to your CCF, and their climate engagement. Next, companies should step-by-step scale this approach to more relevant suppliers. When managing supplier data, the usage of specialised software can be the best way to improve the efficiency of handling supplier information, which will help alleviate the burden on suppliers, enhance transparency, and minimise potential errors and inconsistencies.?

4. Measure: The fourth step involves analysing emissions hotspots. Organisations must identify and prioritise their most relevant emissions hotspots with automated calculations and accurate analytics, whilst also evaluating supplier performance against benchmarks. When analysisng data, it is critical that businesses understand how changes in supplier's emissions data will affect company's scope 3 emissions (e.g. using advanced software or personalised expert support).

5. Collaboration: Collaboration refers to organisations setting common reduction objectives and tracking decarbonisation progress with their suppliers. While organisations will likely be focussed on selecting the right group of suppliers to be prioritised based on defined criteria within the first time of implementation of the supplier engagement programme, it is recommended that supply chain emission reduction targets be set within the next iterations. For example, companies may use the GHG Protocol or SBTi guidance plan reduction initiatives.

6. Optimisation and evaluation: As businesses reach the final step; they will have better data and will therefore be able to create reduction scenarios and projections, together with a deeper understanding of the emission sources in the supply chain that are responsible for emissions. These analyses will set up the foundation for identifying potential reduction initiatives. An additional goal of a well-established supplier engagement programme is that you can implement the identified initiatives in close collaboration with your suppliers.?

Looking for a comprehensive, step-by-step guide to the entire supplier engagement journey? Read Plan A’s guide to supplier engagement for impactful supply chain decarbonisation.?

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