Dense tiers of suppliers may mask carbon “hot spots,” Accenture says

Companies that identify carbon emissions “hot spots” in their supply chain networks can improve sustainability in their march toward reaching net zero targets by 2050, according to a report from the consulting firm Accenture.

The approach is one solution to the common sustainability challenge of lacking full visibility over all the partners in different tiers of complex supply chains, Accenture said in a report titled “Thought you knew the Scope 3 issues in your supply chain? Think again.”

For the report, Accenture developed a data model that uses industry- and country-level trade and emissions data to calculate the Scope 3 contribution of suppliers to their customers. That’s significant because a given company may not emit much greenhouse gas (GHG) within its own operations, known as Scope 1, but it could still trigger heavy pollution by patronizing certain suppliers at the Scope 2 and Scope 3 levels. Those extra levels include everything from the electricity used for heating and cooling buildings to financial investments and business travel.

To reach ambitious climate goals, companies need full visibility across their supplier base to identify where pollution is highest, the company said. That vision will often reveal hidden pollution sources generated by multiple layers of suppliers and subcontractors, since overall Scope 3 emissions are 11.4 times greater than Scope 1 and 2 emissions combined, Accenture found.

“Scope 3 emissions are elusive and difficult to track in today’s complex supply chains. Many large companies don’t even know the suppliers beyond Tier 1, let alone have any sort of influence or control over them or their sustainability practices, which is why we have seen little progress in reductions to date,” Kris Timmermans, Accenture’s Supply Chain lead, said in a release. “Armed with the knowledge of where their emissions sit, companies can do the really important thing – commit to taking action and collaboration with the entire supplier base and all stakeholders, toward a more sustainable future.”

Accenture’s model can show “upstream” emissions sorted by country, industry, and supplier tier, then compare Scope 3 emissions with Scope 1 for specific users. The results show wide variation across sectors: the high tech industry’s upstream Scope 3 emissions are 28 times as large as its Scope 1 emissions, while the utilities sector’s upstream Scope 3 is only one-fifth the size of its Scope 1 emissions.