TLDR
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Given the complexities of many supply chains, measuring Scope 3 emissions could be one of the biggest disclosure requirements for corporate emissions reporting.
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One way suppliers can start to collect data on their emissions is by using a carbon management tool, which can help to manage data collection and track the impact of business operations.
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Automating emissions data collection can save hours of reaching out to energy suppliers, following up on incorrect data, and entering data manually into spreadsheets.
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Providing your team with tools and resources can upskill your employees and build competence around carbon management.
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With a complete view of your company’s greenhouse gas emissions, it could be easier to pinpoint high-intensity areas and opportunities for “quick wins” to reduce your emissions profile.
Supply chain regulation is becoming a major data challenge for corporations and the companies that supply them. According to proprietary analysis by Carbonhound and MaRS Discovery District, by 2028, almost 100,000 companies worldwide will be required to provide detailed disclosures on the environmental, social and governance (ESG) concerns of their global supply chains.
Supply chain emissions fall under a company’s Scope 3 emissions. Given the complexities of many supply chains, it could be one of the biggest, and perhaps most challenging, disclosure requirements for corporate emissions reporting.
The challenge of data management across the supply chain
Whether or not your company is directly or indirectly required to report on its emissions impact depends on several factors, which could include the locations of your operations, supply chain, or commercial markets. For example, companies that export goods to the European Union must be ready to report on their greenhouse gas (GHG) emissions to be compliant with the EU’s incoming Carbon Border Adjustment Mechanism tax structure. Beyond regulatory compliance, a company may wish to voluntarily disclose its emissions data as part of its environmental sustainability strategy, risk management process, or operations management.
A lot of the time, companies don’t have direct access to their supply chain data. Instead, this data lies with suppliers—and it is to these suppliers that companies will start to turn. One way suppliers can start to collect data on their GHG emissions is by using a carbon management tool, which can help to automate data collection and track the impact of business operations.
Carbonhound is a Toronto-based climate action platform that helps companies to do just this. We spoke to Sanders Lazier, Carbonhound’s co-founder and CEO, about how they help suppliers meet customer data requests, and work towards environmental sustainability goals by measuring, reporting and acting on their carbon emissions.
Automate emissions data collection and upskill employees
“When companies first approach us, we want to understand their why,” says Lazier. Knowing the underlying driver for a company’s focus on carbon data can help shape a data collection and reporting process that leads to a measurable commercial outcome.
Carbonhound estimates that there are approximately 4 million suppliers serving larger companies, and they can often struggle with emissions data requests. These suppliers, ranging in size from 30 to 5,000 employees, typically lack the budget for external consultants or a dedicated ESG team. Instead, team members in non-sustainability roles are often enlisted to handle the task.
Automating emissions data collection is a critical step that can save hours of reaching out to energy suppliers; following up on incorrect, missing or confusing data; and entering data manually into spreadsheets.
Carbon management tools can provide customized dashboards to help verify your data collection: “Automation also improves the integrity of your final calculation because all work undergoes quality assurance by the platform,” Lazier explains.
“Data integrity requires transparency,” says Lazier. “If you can’t trust the data you’re getting about your own [emissions] footprint, your customers can’t trust it either.”
Providing your team with tools and resources to help them measure and manage your company’s emissions can make them key players in the process, too. By developing in-house expertise, you can upskill your employees and build competence around carbon management, enabling them to make educated decisions and recommendations to improve efficiencies and reduce your company’s emissions profile.
Opportunities to optimize your business’s operations
Lazier says that while Carbonhound finds most customers start with an immediate need to measure their carbon emissions to comply with customer reporting demands, companies can use their data to inform and drive efficiencies. With a complete view of your company’s greenhouse gas emissions, it could be easier to pinpoint high-intensity areas and opportunities for “quick wins” to reduce your energy usage.
For example, one of Carbonhound’s customers learned that its electricity and natural gas use was a major contributor to its environmental impact. The company cut electricity and natural gas use by 10%, which generated significant cost savings. “It doesn’t need to be complicated,” says Lazier. “We’ve seen companies save money and emissions just by turning off machines at the end of every shift.”
Seeing environmental sustainability efforts generate a financial return relatively quickly could also be an effective way to bring leadership teams on board.
Another way to tap more value from your reduced carbon emissions is to integrate carbon data into sales, marketing and customer relationships. For example, one of Carbonhound’s customers includes carbon emissions data in every report it sends to customers, letting them know the quantity of emissions reduced on a customer’s behalf.
Identify climate-related risks to your business
Although it can be a single customer with a data request that kickstarts carbon management for many suppliers, climate change is also a growing business risk. In addition to using your company’s emissions data to decarbonize your operations, these insights could help to identify potential physical risk drivers—such as extreme weather events and chronic changes to the climate—or transitional changes that may have industry-wide impacts, such as changes to government policies, technology, pricing, and investor preferences.
Collaborating to help collect carbon emissions data
If you’re facing requests for carbon data, with the assistance of carbon management tools, you don’t need to navigate the journey alone. “Our customers appreciate that they no longer feel as if they’re on an island,” Lazier says.
To support clients on their journey to a low-carbon economy, RBC has collaborated with Carbonhound. Speak to your RBC relationship manager today to learn more.
