From Data to Action: Actionable Strategies for Reducing Scope 3 Emissions

Reducing carbon emissions enables organizations to be good stewards of the environment, thus building trust with customers. Slashing emissions output can also help companies comply with regulations aimed at slowing climate change. 

But organizations need to be aware that there are different categories of emissions. Most companies focus on reducing Scope 1 emissions, which result from a company’s activities or operations, as well as reducing Scope 2 emissions, which are indirect emissions that occur during upstream activities such as leasing assets, purchasing goods and services, and purchasing fuel and energy, according to the U.S. Environmental Protection Agency. 

However, reducing Scope 3 emissions, which are indirect emissions occurring downstream, tends to be overlooked by many organizations even though they may constitute the largest share of a company’s overall emissions output, according to a June 2024 report from Boston Consulting Group (BCG) and the Carbon Disclosure Project (CDP). Scope 3 emissions occur during the transportation and distribution of goods or at the franchise level. 

Thankfully, technologies are available to help companies track Scope 3 emissions. For instance, at Searoutes, we have developed API tools that provide organizations with insights into how businesses are meeting their sustainability initiatives along the supply chain. Our API tools also present data that can help companies create actionable steps to reduce their carbon emissions even further. 

Understanding Scope 3 Emissions: The Key to Supply Chain Decarbonization

As we defined earlier, Scope 3 emissions are indirect emissions, meaning that they occur outside of an organization. Examples include emissions from purchased goods and services or from upstream transportation and distribution. Sometimes, these are referred to as value chain emissions, and according to the EPA, they often reflect the majority of an organization’s greenhouse gas emissions. 

Scope 3 emissions are significant because they tend to constitute the majority of an organization’s overall emissions output. The June report by BCG and CDP, Scope 3 Upstream: Big Challenges, Simple Remedies, noted that companies’ reported Scope 3 supply chain emissions were, on average, 26 times greater than Scope 1 and Scope 2 emissions. The report noted that corporations were also 2.4 times more likely to set targets for operational emissions versus supply chain emissions. Furthermore, of the corporations that disclose to CDP, a non-profit global disclosure pact, only 15% have established a Scope 3 target.

By developing strategies to monitor and reduce Scope 3 emissions, organizations tackle the areas where most of their emissions might take place, such as along the supply chain. They can seek additional ways to reduce emissions and meet their sustainability goals. 

Shippers Face Significant Challenges in Understanding Scope 3 Emissions

One of the challenges in reducing Scope 3 emissions is that the emissions occur outside of areas where an organization has complete control. That’s why Scope 3 emissions are called indirect emissions. There might also be a lack of company-wide systems and initiatives in place that enable the monitoring of Scope 3 emissions data and encourage the development of actionable steps.

To pave the way toward creating a Scope 3 emissions reduction program, companies can look at those who have already done so successfully. According to the BCG-CDP report, organizations that want to reduce Scope 3 emissions have three characteristics in common. First, companies that have a board that oversees climate oversight and competence are five times more likely to have a Scope 3 target and a 1.5°C aligned transition plan, the report said. 

Second, organizations that have supplier-engagement programs that promote interactions between the company and its suppliers on climate-related issues are almost seven times more likely to have a Scope 3 target, the report continued, finding that only four in 10 corporations actually engage with their suppliers in this manner.

Lastly, the report found that organizations that have developed an internal carbon price that they use for all decisions are four times more likely to have a Scope 3 target. 

“The responsibilities and incentives to act on Scope 3 emissions for corporates and investors converge on risk management, and their oversight bodies must push for risk quantification and management,” a July 2 Supply Chain Digital story quoted Diana Dimitrova, report co-author and BCG managing director and partner, as saying.

Turning Data into Action: Three Strategies for Reducing Scope 3 Emissions

As we mentioned previously, Searoutes has developed several API tools that enable organizations to create robust programs to reduce Scope 3 emissions along the supply chain. 

We offer the following:

• Comprehensive Emissions Monitoring: Searoutes’ APIs are advanced tools for monitoring Scope 3 emissions across supply chain activities. They can collect and monitor data in real time, and they have reporting capabilities that can help companies prepare data to analyze internally or send off to regulators.
• Data Analytics and Visualization: Searoutes leverages data analytics to provide actionable insights into Scope 3 emissions. Our APIs have interactive dashboards and can create customized reports that can identify trends and help organizations optimize emission reduction strategies. Our CO2 API tool enables users to search for and compare optimal routes based on distance, timing, and emissions emitted, thus allowing users to make intelligent decisions.
• Supply Chain Optimization: Searoutes APIs use route optimization algorithms, modal shift recommendations, and inventory management strategies to help users meet their Scope 3 emissions reduction goals. Our Routing API helps users monitor the fuel consumption and carbon emissions of multiple routings, while our Vessel API provides historical and real-time data on route characteristics and a vessel’s average speed, among other factors. 

Take The Next Step to Tackle Scope 3 Emissions Reductions

Reducing Scope 3 emissions plays a critical role in achieving sustainability in the supply chain. Understanding Scope 3 emissions and what steps can be deployed to reduce them is just the start of a long but fruitful journey toward combating climate change. By using data-driven strategies, such as incorporating insights and solutions from Searoutes’ API tools, organizations can feel empowered to reduce emissions effectively. 

Contact Searoutes today to learn more about how you can reduce Scope 3 emissions along the supply chain.