Surprisingly, it is not just the current most sustainable companies in the world that really want to make a difference. Famously Stuart Rowley from Ford urged people to "Walk Or Cycle Instead Of Driving". Another example of this is in the conversations I have at CO2HERO. I find some of the most enthusiastic sustainability leaders I speak with work in the oil & gas, or automotive industries.
It is an interesting dilemma as on one hand there are huge gains to be had in the race to net zero, but on the other these organizations main products contribute to the bulk of global GHG emissions. They also tend to be some of the most profitable companies in the planet because the products they sell are often inelastic goods, necessities for everyday living.
With all this being said, a recent article by Reuters caught my attention labelling Fossil fuel company net zero plans "largely meaningless". In this weeks edition I explore why that is, and what companies with this dilemma can do about it today.
Deloitte: Scope 3 is where impact is
With some 75 of the world's largest 112 fossil fuel companies now committed to reaching net-zero which is up from just 51 a year ago, you would think that sustainability is trending in the right direction even for the most pollutant of organizations. Undeniably the majority of fossil fuel companies are committed. So why are these efforts deemed " largely meaningless"?
Well this is because they are missing one key component from their reports, the nexus of the scopes, scope 3 emissions. Scope 3 emissions account for a companies value chain including the use of a company's products, the biggest source of emissions for fossil fuel companies. In fact, according to Deloitte, scope 3 can account for more than 70% of a companies carbon footprint and "Scope 3 is often where the impact is".
By being vague, not having a plan or even omitting scope 3 from your sustainability commitment, you can seriously devalue the validity of your sustainability reporting.
Get started, you won't regret it
In our 1st edition of Climate Chats, I spoke with Climate Scientist Veronique Bugnion. A couple of takeaways from the conversation is that although "scope 3 is hard, it is essential". It will take time to figure out an entire value chain. It also will take time to figure out the correct process or accounting method for scope 3, and not always the technology is available. However, every single sustainability leader, whether in a fossil fuel, automotive, or any other sector has the opportunity to start recording scope 3 emissions today.
If you take the Science Based Targets Initiative for example, the manual states that if a company has significant scope 3 emissions (over 40% of total scope 1, 2 and 3 emissions), it should set a scope 3 target. This gives you a goal and now creates urgency. Scope 3 can include everyday activities like business travel, commuting, and stakeholder engagement which includes your employees. With tools like CO2HERO, these are things that can not only be measured, but you have influence over and to an extent, you can control.
Scope 3 is opportunity
Nowadays, sustainability risk is financial risk. This means your sustainability reports, should to an extent, be like financial reports. Financial reports help an organization raise capital, give analysis, and reassure stakeholders. The sustainability report at least should do the same giving clarity and transparency to customers, shareholders, employees, and prospects.
A serious opportunity is missed by not goal setting and giving transparency on net-zero targets especially within scope 3 which is crucial to reaching carbon targets.
The good news is that there is a viable opportunity not only to start planning, but also to report and reduce those scope 3 emissions today. Sustainability leaders, see this as an opportunity, and you will not regret it!