OUR VISION
Is a world of collaboration and clarity - where organizations can share best practices on Scope 3 approaches to move faster and with more certainty towards Net Zero
At the start of 2024, it was reported that the previous 12-month period was the warmest year in a series stretching back to 1850, where the global average temperature was 1.46C above the pre-industrial baseline. However, global warming isn’t just about a marginal temperature increase; it’s about the growth in extreme weather events, often devastating the environment and communities in their path. According to ‘World Weather Attribution,’ recent extreme events would have been "virtually impossible" without human-caused change, much of which is down to greenhouse gas emissions. The Carbon Disclosure Project reports that >80% of these global emissions come from “Scope 3”, namely the value chains associated with organizations, their customers, and suppliers.
Scope 3 refers to indirect emissions that occur in a company's value chain, including both upstream and downstream emissions.
We know by now that there is a binary link between what businesses buy, who they buy from, and the emissions that they generate. However, we also know that many businesses are facing huge cost pressures, which seem to be tempering action on Scope 3 despite the drip feed of tighter regulation encouraging disclosure and reduction in many parts of the world.
The evidence for this is partly anecdotal and partly found in the plethora of headlines from 2023/24, where many large corporations seemingly downgraded or reset their ambitions, now better informed about how practically difficult these goals would be to achieve.. This narrative is supported by the data in The Scope 3 Benchmark, whereby the gap between corporate ambition and practical steps to achieve it is wide, and dedicated investment in procurement capability is low.
It seems simple — reduce supply chain emissions, and you reduce global emissions. However, most organizations seem to still be in the very early stages of maturity, stuck between the “what” and the “how.” Tackling Scope 3 emissions is a bigger problem than each of us — bigger than business and society. There is little justification to compete when we are all facing the same challenge, and the solution, in the near term at least, lies in clarity (on what to do) and collaboration (to get there).
Whether some targets are being pushed out or not, we have reached a tipping point.
Since the last edition of Proxima’s Scope 3 Benchmark report, an additional 5,000 organizations have disclosed emissions to the Carbon Disclosure Project. This now totals over 23,000 organizations, representing two-thirds of global market capitalization.
As of October 2023, 6,000 organizations have either set or committed to set carbon reduction targets in line with the Science Based Targets initiative. When comparing this figure to just 500 in 2018, it is clear that momentum is building, not falling away.
While target setting signals intent, it does not guarantee a credible plan. A recent report found that 93% of organizations with Net Zero targets by 2030 will fail to meet their targets unless they at least double the pace of emissions reduction. Indeed, in 2024 some of the world’s largest organizations are among 239 companies that have had their net zero science-based target “commitment removed” due to progress tracking behind an often-ambitious plan.
This does not mean that these businesses are not making progress; in many cases, they are leading the charge and have made more progress than others. But it does perhaps indicate that many of those leading the charge are now living the realities of hitting ambitious targets and that they must recalibrate as they go.
These realities (that are inhibiting progress) are likely multifaceted. More than ever, organizations are dealing with competing business challenges and priorities - some demanding attention so short-term that 2030 may fall into the important but not urgent pile - too far out to warrant investment of resources much needed elsewhere now.
Collaborating with or following the lead of others is at the heart of accelerating progress, minimizing missteps, and optimizing the cost of change.
Since the last edition of Proxima’s Scope 3 Benchmark report, in 2023, an additional 5,000 organizations have disclosed emissions to the Carbon Disclosure Project. This now totals over 23,000 organizations, representing two-thirds of global market capitalization.
While Scope 3 accounts for ~ 80% of company emissions, the majority of Scope 3 emissions sit with critical suppliers and core supply chains within those companies. These relationships may be deep-set strategic relationships, perhaps honed over several years. With 2030 looming, organizations may have as few as 1-2 sourcing cycles left between now and 2030 to work with these suppliers to achieve their targets.
Our data in this latest edition of The Scope 3 Benchmark Report shows that half of the participants have a 2030 target and that key suppliers are starting to engage on the issue. However, it also shows that many functional and commercial fundamentals are missing to do this structurally. We are certainly talking the talk.
A sourcing cycle encompasses the activity involved in an end-to-end process of procuring goods and services, from vendor selection through purchasing to ongoing supplier performance and relationship management.
Recent collaboration between organizations, industries, and sectors is promising. In fact, industry ‘Collaboration’ remains a top-performing element of The Benchmark, indicating that in the absence of an outright best practice, organizations benefit from sharing valuable knowledge, insights, and joining forces to progress faster and at a lower cost. Sustainability, in general, is fueling a rise in sharing and collaboration.
Proxima’s Scope 3 Maturity Benchmark was developed in collaboration with the Scope 3 Peer Group, a collective comprising over 2,000 procurement and sustainability professionals. It includes some of the largest and most well-known businesses on the planet, and The Benchmark is an initiative to harvest information and ideas from this group and turn them into a framework for action. This approach would allow the group to share realistic ideas and experiences that could add certainty and accelerate progress toward Net Zero.
Our vision is to help organizations address three key challenges: 1 | How and where to start, 2 | How to see a realistic pathway to drive progress, and 3 | How to make the case for funding and resourcing to get it underway.This second edition of The Scope 3 Report explores a rich data set from over 170 organizations that have completed The Benchmark and how it provides the insight needed to support organizations in the three areas outlined. We hope you find it insightful.
