Australian business leaders urged to take lead in slashing Scope 3 emissions

Partners in Performance

CANBERRA, 8 DECEMBER: Leading energy transformation consultants at Partners in Performance echo the messages of the Climate Leaders Coalition’s roadmap released in November 2022, saying CEOs and business leaders are uniquely positioned to lead Australia’s transition to a low-carbon future.

The Climate Leaders Coalition’s Scope 3 roadmap states that companies need to be prepared to look at new ways of financing the cost of reducing carbon emissions, and expect tougher disclosure standards from the International Sustainability Standard Board.

According to the Climate Leaders Coalition, half of ASX100 companies already publicly disclose their scope 3 emissions and approximately 20 per cent have committed to, or have an approved Science Based Targets initiative.

Energy transformation experts at global management consulting firm, Partners in Performance, say this is a sign that it’s time for businesses to move past addressing Scope 1 and 2 emissions, and on to Scope 3, since the technology and funding already exists to do so.

“Scope 3 emissions are greenhouse gases caused by supply chain processes, or a result of products, exports or services not controlled directly by the organisation,” explains Inga von Fircks, Partner at Partners in Performance and specialist in Scope 3 emissions reduction.

“This might include emissions arising from investments and leased assets, the use of sold products, or transportation and distribution.”

While the shift in the climate conversation is leading towards a promising outlook, progress among major contributors is undeniably lagging. According to global disclosure system CDP’s Global Supply Chain Report 2021, only 38 per cent of the some 11,000 companies who submitted environmental data are engaging with suppliers on climate change.

“Reducing one’s carbon footprint needs to be front of mind for business leaders, and it comes down to more than environmental protection.

“Today, energy transition is a business imperative and there will be winners and losers. Several of our clients have started to experience pressure on their emissions when negotiating local and global contracts,” said von Fircks.

“Reaching 30 per cent reduction by 2030 is technically feasible, and in most cases even financially attractive. For most businesses this requires changes that cannot be implemented overnight.

“From a business perspective, if your main trading partners haven’t made a 2030 emission reduction commitment yet, you need to engage and collaborate with them now before the time to act expires.”

According to von Fircks, today’s main challenge is less about measurement, and more about businesses and their trading partners making commitments that align with one another: “Energy transition requires corporate agility and cooperation, and it has moved beyond the reduction of purely scope 1 and 2. Leaders must now proactively pursue opportunities to decarbonise within their value chain to keep pace with the market.”

“Many companies, recognising the need to lower their own scope 3 emissions, are in turn pressuring their suppliers to reduce their emissions. However, in Australia the majority of our clients’ tier 1 suppliers have neither reduction commitments nor emission reporting in place yet.

“As a starting point, organisations should build their scope 3 fact base about supplier and customer energy transition maturity, and action immediate focus areas. They must understand that reducing emissions in both suppliers and end users together will take time – which is why it’s important to start now.”

Partners in Performance works with clients on achieving successful energy transition. “We’ve been working with clients to help them identify supplier and customer specific scope 3 emissions opportunities and set specific reduction targets,” added von Fircks.

“This enabled one client recently to adopt a roadmap encompassing over 80 per cent penetration of renewable energy resources and over 70 per cent reduction of operational emissions.”

Partners in Performance has helped clients mitigate more than 50 Mtpa CO2 in the past 18 months and we are committed to growing this impact by 30 per cent YoY over the next five years.

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About Partners in Performance Partners in Performance is an agile, fast growing international management consultancy; a leading global player in driving operational excellence for complex organisations. By working as a true partner with clients, Partners in Performance enables lasting change in organisations, delivering both commercial impact and inspiring people to transform their behaviours.

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