Can retail solve its indirect carbon emissions problem?
A survey of major global retailers finds that less than 20 percent are on track to cut their Scope 3 emissions — those related to activities outside their operational control — by enough to meet the 2015 Paris Agreement targets for limiting the rise in global temperatures to 1.5 degrees.
Scope 3 emissions typically account for over 90 percent of a company’s total environmental impact, according to the report from Boston Consulting Group (BCG) in partnership with World Retail Congress.
“Scope 3 emissions are more challenging because they include all the emissions generated to make the products that retailers sell (upstream emissions) and the emissions that customers create by using and ultimately disposing of the products that they purchase (downstream emissions),” Scot Case, VP of corporate social responsibility and sustainability at the National Retail Federation, wrote in a blog entry last fall.
To reduce upstream emissions, suppliers are being encouraged to increase the energy efficiency of their operations and use more sustainable materials for products and packaging.
When it comes to downstream emissions, some retailers are making it easier to buy more energy efficient products. Some are also offering more durable products that last longer, making it easier for customers to return used apparel for recycling or resale, or exploring reusable and refillable packaging, according to Mr. Case.
In a recent blog entry, Kathleen McLaughlin, chief sustainability officer, Walmart, noted that the retailer has helped suppliers learn about energy purchases. Walmart also provides enhanced financing and early invoice payments available for private brand suppliers who set science-based emissions targets in line with the Paris Agreement.
Ms. McLaughlin noted, however, that Scope 3 emissions are “notoriously difficult to measure” given that the calculation takes in “multiple variables at every stage of the production, transportation and consumption of millions of items.”
BCG urged closer collaboration with suppliers and industry peers as well as prioritizing sustainability targets at the same level as costs and profits. BCG’s survey found that 54 percent of retailers have not set sustainability key performance indicators (KPIs) across their businesses. The consultancy wrote, “Retailers that perform well along the governance dimension do two things consistently: they regularly publish KPIs internally, and they embed sustainability metrics in their business reviews.”
- Less Than 20 percent of Retailers Are on Track to Meet Their Sustainability Targets, but There Are Reasons for Optimism, says BCG Study in Partnership with World Retail Congress – Boston Consulting Group (BCG)
- Sustainability in Retail Is Possible — But There’s Work to Be Done (blog) – Boston Consulting Group (BCG)
- Sustainability In Retail Is Possible — But There’s Work To Be Done (report) – Boston Consulting Group (BCG)
- Retailers set science-based targets to address climate change – National Retail Federation
- Accelerating Climate Action: Project Gigaton Marks Key Milestone – Walmart
- ‘Scope 3’ Becomes Earnings-Call Buzzword – The Wall Street Journal
- Scope 3 Rules Hinder Progress on Emissions, Researchers Say – The Wall Street Journal
DISCUSSION QUESTIONS: What advice would you have for retailers around reducing their Scope 3 or indirect greenhouse gas emissions? What are the quick wins versus the harder-to-address challenges?