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Reduce GHG emissions for specific products, not all products

Updated: Jan 16

When developing carbon reduction plans, reduction initiatives are typically prioritised by considering their carbon impact, cost and ease of implementation. This results in a practical delivery plan that (ideally!) will ensure emissions are adequately reduced to achieve company carbon targets. However, without also considering the customer perspective in this analysis, companies can be missing out on a huge value opportunity. Why? Because customers care about the individual products they buy, not the overall carbon of your business. 


Imagine a widget company with 3 factories, each of which produces a slightly different type of widget:


Scenario 1: Emission reductions are roughly even across the business 


There is a company carbon target in place to achieve a 40% emission reduction by 2030, which co-incidentally is also the reduction target of their key customer. 

Each factory works diligently to achieve this target. By 2030, Factory A achieves a 35% reduction; Factory B achieves a 40% reduction in the year and Factory C achieves a 45% reduction in the year, with the company overall reduction being 40%. The widget manufacturer proudly tells their customer that their emissions have reduced by 40%.  


The customer is pleased and says their Sustainability Manager will co-ordinate with the widget manufacturer to obtain the information needed for their emission reporting. The customer reports supply chain emissions using the supplier-specific method of the GHG Protocol (the GHG Protocol is the near universally used method for carbon accounting). They ask for product-specific emissions, and they note that their widgets come from Factory A. It’s at this point that the Widget manufacturer notes that only a 35% reduction was achieved at that factory, not the target 40%, and thus the reported figures to the customer show the target as not quite being met. 


In this circumstance, although the target wasn’t met, the outcome is not likely to have a huge downside. A reasonable customer will understand that the widget manufacturer is doing their best, only just fell short of the target, and that likely emissions will be reduced further over time. The relationship will continue. 


Scenario 2: Achieve Net Zero for just one product 


However, imagine another scenario where the same widget manufacturer had achieved their 40% emission reduction goal with a 10% reduction from Factory A, 20% reduction from Factory B and 90% reduction from Factory C. The overall company reductions are still 40% but this time, they can say that the products from Factory C align with Net Zero definitions (which require a 90% emission reduction). For the customer buying products from Factory C, they can now show a far larger reduction in their emissions and when the residual emissions are also removed, can be confident that this purchase is Net Zero, a fact they can externally promote. 


Clearly, the value added to the customer in this second scenario is vastly superior to the first. This is particularly the case for industries with complex supply chains (such as construction/manufacturing) where monitoring and managing emission reductions across vast numbers of products and suppliers is complex and timely and having a supplier who is already Net Zero when so few are, will be hugely positive. The manufacturer can promote this externally as a USP for their business and the widget manufacturer will get new customers wanting their Factory C product. 


Note that even if a 90% reduction is not achieved, but a sizable one is (say 60-90%) there are PR and client relationship opportunities to be had. 


Further, not only is this customer delighted but the widget manufacturer has now shown the art of the possible. Investors and other stakeholders will have greater confidence in what emissions reductions can be achieved and will look favourably on this business as one that can support them in their carbon reduction journey over the longer-term.  


Of course, the only ‘losers’ in this situation are the customers who are buying from Factories A and B, who by 2030 will have reduced their widget-related emissions by only a small amount. But, and this is the crucial thing, these customers will only be ‘losing’ if they are already measuring their supply chain emissions. If they aren’t measuring them, and we know the vast majority of smaller businesses have not yet measured their scope 3 emissions, then they don’t report any emissions change, good or bad, because they aren’t reporting supply chain emissions at all. 


In the longer-term this situation will change because more and more companies will measure their supply chain emissions but for now, achieving ultra-low emissions in selected products for customers which are measuring their scope 3 emissions is a huge value-add opportunity that should be capitalised. 


Authored by Caroline Johnstone.

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