Even though most large electronics companies now routinely measure and report carbon emissions for power generation and purchases (referred to as “Scopes 1 and 2” by the Greenhouse Gas Protocol), they’ve had difficulty reporting the most emitting and costliest “Scope 3” activities. This has been frustrating, because Scope 3 activities – supply-chain and corporate purchases, product transportation, customer use and disposal of products, air travel, and employee commutes — represent the largest opportunity for both reducing greenhouse gas emissions and enhancing profitability at the same time.
The good news is that the GHG Protocol creators WBCSD/WRI ( World Business Council for Sustainable Development and the World Resources Institute) are now bringing standards to the previously elusive “Scope 3” category. So now Lean and Green success stories such as the following recent example will be more numerous: A tech-industry company recently added a logistics hub in Europe to reduce transit distance, time, and cost when shipping products to customers in EMEA. This singular “Scope 3” move reduced the company’s supply-chain emissions by more than 500 metric tons of CO2, and saved customers collectively $2 million in shipping costs.
We recommend that executives looking to reduce emissions and costs from Scope 3 activities begin by identifying the biggest hitters environmentally and financially. Here are some key ones, especially for the electronics industry: Corporate air travel often comes out near the top. It is best addressed through a combination of technology (such as videoconferencing and virtual tradeshows), better planning, and policy changes. Depending on company size, savings range from a few million to tens of millions of dollars annually.
Employee commutes are emissions-heavy. Employee-engagement programs to reduce single-car commutes and enable productive telecommuting also increase employee loyalty.
Emissions from contract manufacturers and logistics are also a problem. Reducing these emissions requires collaboration with manufacturing and other partners and can significantly reduce cost of goods sold.
The use phase of products can represent as much as 90% of a product’s emissions. Invest in design-for-environment programs and work with both manufacturing partners and the users themselves to limit these emissions—benefiting customers as well with lower cost of operations and lower CO2 emissions to report.
We hope that the increased clarity of a Scope 3 standard will encourage more companies to delve in and start accounting for and reducing these emissions, profitably. The WBCSD/WRI draft standard is in the stakeholder review phase and is intended to be published during 2011.
Kim Allen consults with TFI clients on environmental leadership, roadmapping, carbon footprinting, and benchmarking. She has seven years experience in market analysis with iSuppli Corp., mainly in the areas of emerging electronic display technology and cost modeling. Her work included creating the first quantitative forecasts for new technologies, helping clients commercialize products, and speaking at international business conferences. Prior to iSuppli, she worked in business development for electro-optics research and development firm Reveo. She is the author of two book chapters on the display technology market, dozens of magazine and trade journal articles, and five academic papers.