How can we speed up corporate decarbonisation?
Capgemini Invent (part of the Capgemini Group), in partnership with CDP Europe, recently released a report looking into the progress of corporate decarbonisation in Europe since 2019. The key findings revealed a somewhat disappointing picture showing that although activity has increased exponentially, progress is still way too slow to address climate change. Only 37% of Scope 3 emissions from European businesses are addressed by corporate decarbonisation measures. But what can be done?
The report, entitled: From Stroll to Sprint - a race against time for corporate decarbonisation, looked at many industries, including transport, which split into Transport OEMs and Transport Services and Logistics.
Between 2019 and 2022, a significant trend emerged: companies progressed in setting emissions reduction targets, but few implemented impactful initiatives to reduce energy and carbon intensity.
In summary, the report revealed a consistent gap between transparency and action. The number of European companies disclosing to CDP (the charity running the global carbon disclosure project) has grown 56% since 2019, yet 23% of companies still lack emissions reduction targets.
Scope 3 is going to need greater collaboration
Science-based targets approved by the SBTi are now mainstream, but the companies with the highest emissions impact, including transport, don’t have them. This is primarily due to the complexities of Scope 3 emissions reporting, including downstream through the whole supply chain and upstream to customers.
The good news is that companies are improving at using energy efficiently to reduce pollution. They're doing well in reducing emissions directly from their operations (Scope 1 and 2 emissions). These emissions dropped by around 14% in most sectors, while the companies also made 8% more money.
However, the problem lies with Scope 3. These make up more than 90% of all the emissions from companies. Sadly, not enough action is being taken to deal with these emissions. European companies, for instance, reported that 92% of their emissions in 2022 were Scope 3. The primary sources of these emissions are the products they sell (64%) and the things they buy from others (19%).
Even though this is the case, the actions taken to reduce emissions related to customers and suppliers only covered around 37% of the total emissions from these sources.
Hard to deal with
Transport OEMs and Transport Services and Logistics are “hard-to-abate” sectors because their production and revenues are highly carbon sensitive. In 2022, 25% of companies in the hard-to-abate sectors disclosed only intensity targets versus 10% of companies in other sectors. This enables them to secure their trajectory in the event of increased activity.
Other industries are lagging in low-carbon energy sourcing due to the inadequate maturity of alternative sourcing, such as hydrogen or renewable electricity. This is the case for Transport Services and Logistics and Wholesale, Retail, and Distribution, where 90% of energy consumptions were covered by non-renewable fuels in 2022, especially oil for transporting goods.
So, what are some levers to decarbonise Scope 3?
Companies do not have complete control over scope 3, as it depends on suppliers, consumers, external stakeholders, employees, and adjacent value chains. The first challenge is to quantify emissions accurately and comprehensively. After that, the levers will be specific, depending on the sector. Here are some suggestions:
For Transport OEMs
- Implement a carbon price on purchases among the parameters for the selection of suppliers
- Foster the rework of packaging to make it more sustainable
- Optimise logistics to reduce distances travelled
- Decentralize equipment storage to reduce the need to transport equipment
- Develop products with advanced power management feature
- Improve material efficiency by minimising the use of rare earth elements
- Source alternative raw materials such as recycled gold and silver, low-carbon aluminium, or alternative metals
For Transport Services and Logistics
- Reduce home deliveries by implementing click & collect
- Implement last-mile delivery with alternative vehicles
- Look into sourcing and using electric heavy road transportation vehicle
- Use biofuels to power heavy road vehicles
- Acquire heavy road transportation vehicles made from responsible sourcing (recycled materials or green materials)
- Source operational and design efficient heavy road transportation vehicles
- Use of high-capacity vehicles (duo trailers) for road transportation
- Explore the viability of replacing vans with cargo bikes or other zero-tailpipe emission vehicles in cities and urban areas
- Reduce transit packaging
- Increase backhauls practices to reduce empty trips in road transportation
- Avoid empty containers by developing leasing for shipping transportation
- Consolidate load and share assets through digitally enabled aggregators
- Develop open warehouses and transport networks
- Develop backhauling practices to reduce empty journey
Some sectors have made good progress in reducing emissions from scopes 1 & 2. However, the biggest problem is with Scope 3 emissions, which comprise 92% of all reported emissions. Companies must change their approach and work harder to reduce these emissions by involving everyone in their supply chain.
As the report's title suggests, time is running out. Companies must set big goals and do bold things to reach them. This is more important than ever before.