Supply Chain, or Scope 3 emissions are generally classified into three categories:
Each category is expanded on below.
At various stages of the value add process, equipment is likely to be used. Equipment that is powered is either going to be powered via an electricity source or an oil derivative such as diesel.
For equipment powered by electricity, the carbon is created by the electricity being generated at source. If this source is the National Grid then the carbon created will be a calculation of time the equipment is used, the power rating of the equipment and the amount of carbon the grid produces for every unit of power it produces.
As we move closer towards a Net Zero world we should have expectations that more greener and sustainable power sources are used in the place of National Grids and oil derivative fuels.
We should also have an expectation that Governments are investing in their power infrastructures by increasing the percentage of power generated by greener sources and reducing the amount of dirty fuels used. This will bring down the amount of carbon the National Grids produce which in turn will reduce the Scope 3 calculation for a company’s supply chain.
It is reasonable for goods to be stored at various points as they pass through the supply chain.
Many of these storage facilities will require some type of power source for lighting, climate control and security. Similar to the use of Equipment, the power sources these infrastructures are connected to will be the source of carbon creation.
The calculation will be based on the overall power consumption of the infrastructure and apportioned out on a percentage the goods use of the infrastructure over the period it is used.
One of the largest causes of carbon creation is how goods are moved between the various stages of the supply chain. It relates to the modes of transportation and the vehicles used at each point.
Even though sea shipping as an industry is responsible for around 1% of global emissions, this is a factor of the volume shipped rather than sea shipping being pollutive. In fact, across the four main modes of transportation (sea, air, rail and road), sea is the least pollutive per kilometre per tonne.
Transportation is a major category of carbon production as procurement teams have never previously needed to factor in how the goods are moved around the supply chain before. The only previous consideration has been unit price.
In a Net Zero world, this all changes as the cheapest unit price may be the wrong metric if that supplier has a high environmental cost of supply.