According to our recent research, a combination of
regulation and consumer demand means that 93% of multinational
companies are now taking steps to address carbon emissions directly
related to their business. More companies are recognising that
lowering their carbon emissions leads to reputational and
efficiency gains, which means savings to the bottom line and
ultimately increased revenue.
Addressing scope 3 emissions
There is also an increasingly pressing need to address a bigger
challenge - 'scope 3' or indirect emissions
that are a consequence of the activities of the reporting company,
but occur at sources owned or controlled by another organisation -
including both upstream and downstream of companies along the value
chain. This comprises those generated by all the emissions of
everything a company buys, right back to raw material extraction or
agriculture, as well as all the emissions that are produced from
everything a company sells or disposes of, through retail, use and
Taking a 'carbon lens' to
your value chain is another way to improve the environmental
and economic performance of your business - it unlocks the way to
do more with less.
To put this in context for an individual company,
GlaxoSmithKline revealed in its 2010
Sustainability Report that 80% of its overall carbon
footprint comes from indirect emissions - with 40% of this
resulting from the use phase of its products, such as propellants
As well as GSK, our Business Advice experts are also
working with other forward thinking companies including
BT, Taylor Wimpey and Whitbread to help them identify carbon
hotspots within their supply chain and with some of our clients,
uncover reduction opportunities, quantify the value at stake and
set targets for the reduction of their indirect carbon emissions.
These companies recognise the business rationale for reducing scope
3 emissions, for example, security of supply, resource scarcity,
commodity inflation, waste reduction, supply chain optimisation,
and enhanced customer value proposition.
As these leaders take action, public awareness and expectation
of other businesses to do likewise is increasing and becoming a
factor in product differentiation and consumers' buying decisions.
Companies must also act to stay ahead of the competition.
If the world's leading companies see an opportunity to reduce
their environmental impact, enhance their reputation, and boost
sales by acting on indirect emissions, this will have implications
for the many other businesses which supply them. Multinationals
will increasingly seek partners which can support their
environmental goals, especially as consumer demand for low carbon products continues to grow.
New regulations and the move to consumption-based accounting,
together with voluntary schemes such as the CDP, are also
encouraging companies to seek advice on addressing their indirect
Green supply chains
A survey by Carbon Trust Advisory has found that 50%
of multinationals expect to select their suppliers based upon
carbon performance in the future and 29% of suppliers could lose
their places on 'green supply chains' if they do not
have adequate performance records on carbon. Conversely, 58% of
multinationals will be prepared to pay a premium for lower carbon
supplies in the future.
Addressing indirect emissions is a significant challenge and is
a complex area, yet we expect 84% of multinationals to look at ways
of reducing their indirect emissions within the next three years.
Now is the time to start evaluating how this will affect your
business - as it will play an increasing role in purchasing
decisions and in financial and risk planning. It will also be a key
factor in distinguishing brands, building reputations and enhancing