May 2024 – Whilst Scope 3 emissions disclosures are currently voluntary in many industries, the Science Based Targets Initiative (SBTi) requires organisations with verified carbon reduction targets to disclose their Scope 3 emissions if they account for 40% or more of their overall emissions1. Greenhouse gas (GHG) emissions represent a big portion of Scope 3, ranging from 80-95% of an organisation’s overall value chain footprint2.
These huge numbers highlight the growing significance of Scope 3 disclosures for investors and stakeholders when they’re assessing the readiness of organisations to adapt to a low-carbon economy. McKinsey highlighted that drivers of Scope 3 emissions differ by sector meaning organisations must evaluate the best methods for reducing carbon emissions3. For example, aviation emissions have already risen back to pre-Covid levels, and are continuing to rise. To combat this, aviation companies must look for an alternative to fossil fuels for traditional jet fuel. OEMs must work with their suppliers to identify the breakdown of emissions throughout their value chain and reduce such emissions through better sourcing decisions, material adjustments or process transformation, amongst other things.
Most organisations’ Scope 3 emissions are impacted by their suppliers’ and customers’ Scope 1 and 2 emissions. Therefore, it’s key to ensure mutual collaboration and engagement throughout the value chain in setting decarbonisation targets and strategies.
In the UK, the Climate Change Act imposes a legal obligation on the government to achieve a 100% reduction in greenhouse gas emissions by 20504. By reducing Scope 3 emissions, businesses can align to the UK’s 2050 net-zero target and climate change target of emissions reduction of 78% by 2035 compared to 1990 levels5.
Aside from the legal aspect, climate risk is anticipated to influence supply chains and cost profiles in the upcoming 12 months and beyond6. From our internal research, the impact of climate change on supply chains encompasses working temperature and infrastructure strain, higher maintenance costs, and reduced durability of materials not designed for higher temperatures. This is alongside risks to inbound and outbound transport, including rail and tarmac, under extreme heat conditions.
Sustainable Supply Chain Solutions
In a study by EcoVadis, supply chain operations now account for 60% of global emissions and 80% of the average company’s emissions footprint7.
Your business is responsible for ensuring that the products and services you provide meet ESG requirements. You can do this by monitoring your GHG emissions, to not only future-proof your organisation but deliver long-term value8. The magnitude of the challenge varies significantly based on the nature of your business, your sector, international reach, and other factors.
But where should businesses focus their efforts on reducing their Scope 3 emissions?
We recommend looking at your organisation’s inbound supply chain when tackling Scope 3 emissions. At Unipart, we employ a practical approach rooted in process and engineering best practices to address Scope 3 commitments, including suppliers’ Scopes 1, 2, and 3 emissions. As we know, with suppliers’ Scopes 1 and 2 contributing to the OEM’s Scope 3 emissions, effective collaboration in measuring and enhancing sustainability is crucial for success.
Our comprehensive approach begins with a high-level diagnostic assessment of demand, capability, capacity, and cost-to-serve. We follow that with three assessments, which make up the formulation of defined outcome plans. Our final step involves implementing a long-term, consolidated improvement plan in a balanced manner.
We deliver a benefit-funded programme that comprises the process and supply chain assessment, defined product lifecycle assessment, and facility cost and forecast analysis.
Our Sustainable Consultancy Approach
The Process and Supply Chain Assessment starts with an evaluation of the OEM’s existing supply chain and logistics footprint. This step includes assessing its adequacy in delivering sustainable and excellent customer service. The evaluation includes a thorough review of the supply chain strategy using our established supply chain maturity assessment. The comprehensive maturity assessment and its outcomes are complemented by a supply chain value stream map and logistics network analysis. This approach helps us to identify strategic-level misalignments or issues and propose initiatives for strategic improvement.
The Defined Product Lifecycle Assessment evaluates the product lifecycle within the supply base, which is crucial for achieving net zero. The lifecycle assessment (LCA) provides a defined carbon reference for each product assessed, helping in understanding the impact of materials within the supply chain. We use an AI-powered assessment tool, EMVIDE, to allow us to insightfully, but quickly establish the footprint of products across the lifecycle, meaning the speed to make improvement decisions is faster. This in-depth analysis enables us to identify key areas for enhancement and initiate engineering and sourcing changes.
A Facility Cost and Forecast Analysis involves the assessment of water, gas, and electricity, which can accurately transform a building into a purposeful tool from a resource control perspective. Using our energy monitoring tool, Eco Insight, we measure the Scope 1 and 2 emissions of a product and support phase 3. This information empowers businesses to make real-time cost, output, and carbon balance decisions. The roadmap we develop then serves as a carbon reference, outlining improvements in sourcing options, resource usage, process efficiency, and quality improvement.
Our Sustainable Supply Chain Solutions service model delivers the outlined programme, embedding a continuous improvement ethic for accelerated learning. Long-term continuous improvements establish a benefits-funded carbon-balanced programme, benefitting both OEM supply chain primes and suppliers, supporting commitment and reducing costs. In anticipation of industry-wide improvements, we predict enhanced process efficiency, optimised sequencing for OEMs, minimised Work In Progress (WIP), decreased road and air transportation distances, greater availability of reusable packaging options, and heightened resilience throughout the supply chain. With this distinctive approach, we are prepared to support organisations aiming to minimise their environmental impact.
Depend on Expertise: Our Proven Track Record
At Unipart, we are committed to maintaining and improving a sustainable, environmentally responsible business model. Since 2016, we have achieved 0% waste-to-landfill and continuously find ways to enhance our commitment.
In 2023, our dedication was recognised with an exemplary score of over 95% in the British Safety Council Five Star Environmental Sustainability Audit, alongside the prestigious BSC Globe of Honour. This audit, used worldwide by organisations, cements our dedication to sustainable best practices. Our membership in the ‘Business in the Community’ network underscores our public commitment to operating responsibly, adopting greener practices, and building positive environmental change.
Our key initiatives illustrate this, including our focus on carbon reduction through sustainable fleet operations. This has been marked by the introduction of eight fully electric trucks into the largest healthcare organisation in the UK.
We’ve also collaborated with the UK’s largest woodland conservation charity in a tree planting initiative, demonstrating our on-going commitment to combatting climate change. These initiatives align with our overarching commitment to achieving net zero across our operations by 2030.
As further proof of our commitments, since 2004, our partnership with a leading media and entertainment company has resulted in zero-landfill solutions for returns. This has prevented 100% of engineer waste from reaching landfills by implementing recycling and reuse solutions. By closely integrating repair operations with inbound logistics, we successfully removed over 610 tonnes of CO2 emissions (equivalent) from the company’s annual distribution emissions.
Our Sustainable Supply Chain Solutions bring together the collective strengths and expertise of Unipart Group, drawing on our seven core competencies in consultancy, planning & supply chain management, design, engineering & manufacturing, logistics & transportation, distribution & wholesaling, circular economy services, and improvement technologies.
These, aligned with the continuous improvement ethos of the Unipart Way, means we have a distinctive skill set that uniquely positions us to counsel on the seamless integration of a sustainable business model.
If you’re looking for more support with your supply chain’s sustainability journey, get in touch with us at Unipart Consultancy. Contact us here.
References
- Science Based Targets – What are the emissions scopes which scopes do targets have to cover
- New Climate Institute – Corporate Climate Responsibility Monitor 2022 – February 2022
- Charlotte Bricheux, Jonas Lehr, Lucas Ponbauer and Sebastian Gatzer – Tackling Scope 3 emissions through supplier collaboration – January 2024
- Climate Change Committee – A Legal Duty To Act – July 2023
- Department for Business, Energy & Industrial Strategy – UK enshrines new target in law to slash emissions by 78% by 2035 – April 2021
- PwC – 73% of CEOs around the world believe global economic growth will decline over the next 12-months, the most pessimistic outlook in over a decade – January 2023
- EcoVadis – Carbon Action Report Shows Supply Chain Emissions Reductions Accelerating as Companies Reassess in Year Two – November 2023.
- Lucy Pérez, Dame Vivian Hunt, Hamid Samandari, Robin Nuttall, and Krysta Biniek – Does ESG really matter—and why? – August 2022