McKinsey highlights that regardless of the industry, the reduction of Scope 3 emissions will likely require not only new processes and technologies but also new kinds of collaboration with customers, suppliers, and stakeholders.
Ultimately, lower emissions may even require completely new business strategies.
Six levers for reducing emissions while capturing new value.
1. Supplier and customer selection. One way organizations can decrease their upstream Scope 3 emissions is by selecting suppliers that have minimized their own carbon footprints. Dual-mission sourcing, or buying a product that minimizes both cost and carbon footprint, is becoming the standard across corporate procurement teams.
2. Downstream.
Organizations can encourage customers to reduce emissions while using their products.
3. Product specification. Organizations can adjust their product specifications to rely more on lower-emissions materials.
4. Partnerships. Partnerships focused on new technologies are particularly well suited to creating low-carbon product lines and processes,
which in turn can propel decarbonization actions. End-of- life solutions. Recycling and other circular solutions can reduce end- of-life emissions once a product has been purchased. Recycling can also produce raw materials that are suitable for reuse in new products, thereby reducing upstream emissions as well.
5. Green portfolio strategies. Companies with significant downstream emissions can consider redistributing their portfolio, with a greater emphasis on lower-carbon business segments.
6. Value chain integration. Value chain integration is when an organization creates new opportunities for value in the course of its normal production operations. Upstream integration can increase a company’s control over gases emitted prior to production. Downstream integration, after a product is sold, can help control emissions during a product’s use.
Addressing Scope 3 emissions is paramount for several reasons, as explained Sjoerd de Jager, CEO & Co- Founder of PortXchange. "Firstly, they constitute the most significant portion of a port’s carbon footprint. Ignoring them risks an incomplete sustainability strategy and missed opportunities for improvement. Secondly, it affects the ability of ports to reduce their impact on the local environment, including air and water pollution, greenhouse gas emissions, noise, and traffic congestion, as well as allowing them to positively engage with the local community. Finally, acting on Scope 3 emissions can yield cost savings through increased efficiency and build resilience to regulatory changes and market shifts."
From 2025, EU companies will be required to track and report their Scope 3 emissions. Most global shippers and providers are already shifting toward greener shipping practices, which means using as few resources and as little energy as possible to move goods. And more than seven in ten of those recently surveyed said they would be willing to pay more for green shipping products. McKinsey estimates that demand for green logistics could reach an estimated $350 billion in 2030.
The Danish group Maersk plans to use green fuels for its ocean shipping; 26 of its vessels have been commissioned to run on green methanol. Companies are also developing collaborative partnerships to accelerate shipping decarbonization, such as the one between Maersk and French shipping company CMA CGM.
THE REPORT | DEC 2024 | ISSUE 110 | 135
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