Moving forward from discussion to action: Decarbonization & measuring Scope 3 emissions

We are past the point of determining the what around decarbonization. It’s time to tackle the how.

Determining the what: a broad consensus for the urgent need for companies to decarbonize across their value chains – particularly tackling scope 3 emissions – has been established.

By decarbonizing, we mean reduce the carbon footprint of energy and materials. Looking specifically at scope 3 emissions, we mean indirect emissions, or emissions released in the process prior to production, e.g., when sourcing raw materials, and after production, e.g., when distributing the product to the customer. As we only have an indirect connection to those CO2 emissions, monitoring scope 3 is complex and challenging for us – as it is for all companies.?

Tackling the how: as the saying goes, you cannot manage what you cannot measure. The solution? Data! But how do you gather data on scope 3 emissions so distant from your core business?

Currently, most companies are using average information, often from databases, to estimate their scope 3 emissions. To drive improvement in upstream emissions (prior to manufacturing), companies need to be able to incorporate supplier-specific information for better quantification. This challenge is not unique to one industry – meaning its solutions aren’t either.

Henkel is working hard to address measuring scope 3 emissions, also together with partners. As a B2C and B2B business, we see the issue from the perspective of a supplier and buyer. We touch a variety of industries, from chemicals to fast-moving consumer goods. We recognize the importance of data in tracking our own operational footprint for our customers and for measuring ourselves against our targets. But data is critical not only to establish a common understanding of the issue within our business, but also in the value chain, including Tier 1, 2 and 3 upstream suppliers. The challenge and solutions lie in alignment across each layer.

Our goal: We want to enable a circular and net-zero carbon future by transforming our business, products and raw materials. This includes reducing scope 3 emissions in line with Science-Based Targets (SBTi). By 2030, we aim to reduce our emissions from raw materials and packaging that meet Scope 3.1 “Goods and Services” of the GHG Protocol by 30% per metric ton of product compared to 2017.

But we cannot act alone. We believe in three primary ways to address scope 3 emissions:

• We need industry partnership; supply chains are too interdependent for individual companies to tackle the issue alone.
• We need supplier partnership; we must set common standards on scope 3 product carbon footprint measurement and jointly drive emission reduction along the value chain.
• We need to (re)shape the system: driving progress is about moving economies forward on a macro level, changing the way entire systems function.

Henkel is a founding member of TfS - TOGETHER FOR SUSTAINABILITY AISBL , an initiative driven by chemical procurement specialists to deliver solutions to enhance sustainability within the supply chain. TfS’s members represent a global annual turnover of 800 billion euros. We believe the impact of TfS’s work goes far beyond the chemical industry, as chemicals essentially touch every company’s supply chain.

In fall 2022, Together for Sustainability launched the first-of-its-kind Product Carbon Footprint (PCF) Guideline. A product’s carbon footprint measures the climate impact of a product. This guideline is a step-by-step guide to help chemical suppliers calculate their product carbon footprint in a harmonized way – and it is the new gold standard for doing so. It is fully compliant with existing standards, including ISO and the Greenhouse Gas Protocol.

With more accurate data, corporations will have a clearer picture of their upstream supply chain emissions, making collaboration with their suppliers much easier. As an open-source tool and by sharing accurate PCF data, suppliers can better identify areas for improvement and see the benefits of that work reflected in reduced emissions measurements. In addition to member companies, a wide range of individual experts in procurement and sustainability as well as NGOs and suppliers – collaborated to find consensus on the Guideline.

It is partnerships like TfS that will help us as companies solidify understanding of a common what across the industry and move to tackle the how. And the when? Now – by investigating and knowledge sharing in a transparent way across industries.