WEBVTT

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- Companies tackle Scope 3 emissions

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as it is an essential step
towards meeting net zero targets.

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(gentle music)

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Scope 3 emissions are generated indirectly

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by activities other than the usage of fuel

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and energy in one zone operations.

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According to the Greenhouse Gas Protocol,

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there are 15 categories,

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both upstream and downstream
of the core business,

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that relate to Scope 3 activities.

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This can be the purchasing
of raw materials,

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of packaging of services,

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and further downstream the
usage of transport, travel,

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even the treatment of products
at the end of their life.

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And so, for companies that are
further down the value chain,

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such as retailers,
consumer goods companies,

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Scope 3 emissions can
account for 75 to 90%

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of the total emissions footprint.

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Therefore, it is material
and it needs to be addressed.

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(gentle music)

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There are many advantages to addressing

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Scope 3 beyond the obvious
climate benefits, of course.

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As I said, it is an important step

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on the pathway to net zero,

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but not only from an emissions standpoint.

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Addressing Scope 3 brings alignment

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amongst leaders of a company,

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towards a portfolio of
products and services

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that better meets consumer expectations.

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Now let's be honest, addressing
Scope 3 is very hard,

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but my experience is that
it creates a sense of unity

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across all functions of an organization

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who come together to solve
a very difficult problem.

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And this generates creative tension,

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which leads to innovation
in raw materials,

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in recipe design.

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It even drives business model innovation.

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And undoubtedly, all of this will be

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a source of competitive advantage.

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Another benefit is that
some decarbonization levers

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can bring a cost reduction.

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For example, removing
waste from some processes

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or reducing overconsumption,
for example, less packaging,

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or replacing more conventional solutions

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with others that are lower cost.

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A good example is utility-scale solar PV,

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which today is the cheapest way

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to generate electricity in most countries.

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Another benefit is that there is

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a plethora of public and
private funding available.

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One example could be the $479 million

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of government incentives in
the US by the IRA and the IIJA.

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And this will make sustainable materials

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easier to produce and to access.

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Also on regulation, this is evolving.

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For example, the European
Carbon Border Adjustment

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will make materials that are high-emitting

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the more expensive option.

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So, there are many advantages,

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be it developing a portfolio

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which is better meeting
consumer expectations,

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Scope 3 can bring an innovation boost,

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which can drive competitive advantage

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and there are mechanisms
that are being put in place

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that will make the
economics quite appealing.

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2030 and 2050 seem like a
very long time from now,

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but I would argue we're
running out of time.

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A few reasons for that:

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Given the large share that

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Scope 3 emissions have
in the overall baseline,

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it will take the transformation
of the extended supply chain

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to meet net zero goals.

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This will mean engaging suppliers,

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peers, others in the industry,

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and coordinating that will take time.

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So, starting now is important.

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Another reason is that the scarcity

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of sustainable resources is real.

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There is in recycled plastics alone,

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a 45% mismatch between supply and demand

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to meet the 2025 targets.

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And we see that the competition

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for these sustainable
resources is increasing.

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This is the right time to accelerate.

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It can be done effectively

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when Scope 3 becomes a strategic priority.

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It will take time to see results

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and therefore, it'll require

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what I call some corporate patience.

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The first step is to
build a reliable baseline

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and identify the Scope 3 emission hotspots

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and therefore focus.

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It is important to stop the fragmentation

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across the hundreds of projects

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that may not deliver results on time

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and possibly not with the
right return on investment.

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A second point would be to
internalize the need to be bold.

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We see this, for example,

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in the pharmaceutical
industry or in consumer goods,

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that making small re-engineering
changes of the business

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will not be sufficient
to meet net zero targets.

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Companies will have to make big bold moves

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and therefore, starting
to plan for that early

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will be a big part of the success.

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I would advise starting to
engage with strategic suppliers,

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and particularly, the big emitters

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and addressing emissions at the source.

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The unlock here will be to
move on from pilot projects

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onto larger transformation at scale.

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It is equally important to
start being more collaborative

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and forming partnerships
with strategic suppliers

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to be part of innovation
groups and buying groups

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in order to be a member of that

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broader system transformation
and play a part in that.

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And then, surely the talent
gap in climate is there.

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And so my advice would be to
start upskilling internal teams

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that will be responsible for
the Scope 3 transformation

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and equipping them with
the right skills and tools

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to be able to be effective.

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And I would even advise
extending that support

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to a select set of strategic suppliers.

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(dramatic music)