Scope 3 emissions? Get on with it, CEOs told

A new report backed by major companies urges leaders to do more. It comes ahead of a meeting of almost 50 top businesses to discuss how to tackle the challenge.

The report says companies need to be prepared to work more collaboratively to reduce their carbon emissions including sharing data and examples of best practice. Picture: Brendon Thorne/Getty Images

Australian chief executives need to step up actions to reduce their Scope 3 emissions including having more proactive discussions with suppliers, according to a new report by the Climate Leaders Coalition issued on Tuesday.

The report, which comes as the leaders of almost 50 top Australian companies are meeting on Wednesday to discuss ways to tackle their Scope 3 emissions, says companies need to be prepared to look at new ways of financing the cost of reducing carbon emissions and be ready for tougher disclosure standards.

It says companies need to be prepared to work more collaboratively to reduce their carbon emissions including sharing data and examples of best practice.

Former Telstra chief executive David Thodey, the co-chair of the Climate Leaders Coalition, said reducing Scope 3 emissions – the emissions outside the direct control of company including those of suppliers, customers and employees commuting – was critical in the move to net carbon zero.

The report estimates that Scope 3 emissions can make up as much 95 per cent of a company’s direct and indirect carbon impact.

Mr Thodey said companies needed to start engaging on ways to cut down their Scope 3 emissions as these were often much larger than the direct emissions made by individual companies.

“While the challenge of reducing scope 3 emissions is complex and wide ranging, it is far from insurmountable,” he said. “The work we have done proves this which is why we are now sharing the lessons we have learned and the results we have achieved to help others and to spur action.”

He said the report showed the value of collaboration between companies along the supply chain to look at ways to reduce emissions. “We need to collaborate to solve the challenge. None of us can do it by ourselves,” he said.

“It is a big challenge for Australia to get to 43 per cent reduction in emissions by 2030.”

“It is not straightforward and we need to start engaging now.”

The report says reducing Scope 3 emissions involves the “creation of new markets and completely new models of partnering” including building stronger, more trusted relationships along supply chains. It says that chief executives need to have direct conversations with the chief executives of their suppliers to discuss their goals about reducing their carbon emissions.

The report – backed by companies including Qantas, Woolworths, Woodside and Dexus – says that assessing the carbon emissions of a supplier need to be part of the procurement decisions in choosing suppliers.

The report also warns companies they will need to be prepared to look for new ways to cover the cost of the increased investments needed to decarbonise across supply chains.

Wednesday’s meeting will see the leaders of companies discussing the lessons from the case studies done for the report.