THE ISSUE

Value chain or “Scope 3” emissions are often the largest source of corporate carbon footprints, yet to date they have been the lowest area of focus for most companies. Many have not yet taken direct action due a number of barriers, ranging from:

1. Uncertainty about who is responsible for these indirect emissions
2. Limited access to supplier emissions data
3. Lack of guidance on how to account for the reductions from investments in their supply chains
4. Inadequate recognition, thereby reduced incentives to invest in meaningful change beyond direct operations

THE SOLUTIONS

With support from EIT Climate-KIC, Gold Standard, Danone, Livelihoods Funds, Mars, Science Based Targets and other partners have developed the Value Change Programme, featuring several practical tools to remove barriers to addressing value chain emissions:

HOW TO PRIORITISE OPPORTUNITIES AND REDUCE EMISSIONS

Value Change in the Value Chain: Best Practices in Scope 3 Greenhouse Gas Management>> developed by the Science Based Targets initiative, Navigant and Gold Standard, outlines the various levers for reducing value chain emissions — business model innovation, supplier engagement, procurement policy and choices, product and service design, customer engagement, and investment strategies. It helps companies navigate these to set the most effective strategies for their own business.

VALUE CHAIN INTERVENTION LEVEL RECOGNITION BY ACCOUNTING PROTOCOLS

Often, the most meaningful change can come from interventions that help partners upstream and downstream reduce emissions. Yet to date, emission reductions at the intervention level could not be accounted for in the leading GHG accounting frameworks, like the GHG Protocol. Thus, companies were not recognised for these emission reductions in their corporate footprint, limiting the incentive to invest in these projects and programmes.

The new Value Chain Interventions Guidance>> developed by Danone, Gold Standard, Livelihoods Funds, Mars, the Science Based Targets initiative, and TREES Consulting enables reporting on emissions reductions toward performance targets, in line with common accounting frameworks like the GHG Protocol.

DIGGING INTO SECTOR-SPECIFIC GUIDANCE

Focusing first on the Food & Beverage sector, Danone, Gold Standard, Livelihoods Funds, Mars, TREES Consulting and Unique forestry and land use GmbH drafted Soil Carbon Guidance>> to demonstrate how to quantify carbon sequestered in soil, a severely neglected source of carbon sinks and a linchpin in farmer productivity. 

CREATING BUSINESS VALUE

Sometimes the most transformational mitigation strategies come with a price tag, yet there are a variety of benefits to business, including: 

1. Scope 3 emissions reduction efforts by one company lead to emissions reductions in other companies’ inventories, providing a benefit for value chain partners who may become increasingly subject to carbon pricing or compliance requirements.
2. Interventions that mitigate climate -- and which are often designed to provide other local benefits -- engender goodwill or incentives from host countries where companies do business.
3. Third party verification of Scope 3 emission reductions using such globally-accepted practices for value chain interventions increases credibility, thus confidence among investors and consumers that companies are positioning their business in line with a low-carbon future.

NEXT STEPS

Mars, Danone, Barry Callebaut, Ben & Jerry’s, Cargill, General Mills, L’Oreal, PepsiCo and Target are amongst the first corporates who have signed up to pilot third part verification in their value chains and to provide feedback on the new guidance for a final version to be published in 2019. Future efforts under the Value Change programme will explore and test additional sector-specific applications, likely to include Textiles and IT.

If you would like to find out how to get involved with this programme, please contact platform@goldstandard.org>>

This work is supported by EIT Climate-KIC to scale climate-positive action throughout corporate value chains.