Introduction
Supply chain emissions are typically the single largest source of greenhouse gas (GHG) emissions for most businesses. However, they are also among the most difficult to measure and reduce, as they occur outside of a business's direct control. Below, we introduce a few tips that can help small businesses obtain accurate and reliable GHG emissions data and identify opportunities for reduction across their supply chain.
Carbon accounting
Spend-based carbon accounting is a method businesses can use to calculate and identify the sources of their supply chain emissions. There are many online tools available to help simplify and automate this process, one of these is Sage Earth, which integrates with Sage Accounting and extracts spend data from a user’s financial accounts.
Sage Earth takes the financial value of your purchased goods and services and uses emission intensity factors (EIFs) to convert them into an emissions equivalent known as carbon dioxide equivalent. With the addition of activity-based data, specific to a business’s operations, Sage Earth generates an overall carbon footprint estimate and identifies the areas of spend which have the greatest climate impact. Learn more about Sage Earth here: Carbon Accounting Software | Sage Earth.
Open-source emission intensity factors
Emission intensity factors are numerical values that represent the amount of GHG emissions associated with a specific product, service or activity. They are usually expressed in units of kilograms of carbon dioxide equivalent (kgCO2e) per pound spent, or unit of activity.
Open-source emission intensity factors are publicly available and transparent and can be accessed and used by anyone for free, provided they are used for non-commercial purposes. Some of the most common and reliable sources are:
The UK government's greenhouse gas reporting conversion factors, which provide emission intensity factors for various activities, such as energy, transport, waste, and business travel. These factors are updated annually.
SWC (Small World Consulting)’s MRIO database provides free-to-use (for non-commercial purposes) spend-based emission factors businesses can use to estimate the greenhouse gas emissions associated with different types of spending.
The Environmental Product Declarations (EPDs) of specific products and services, which provide emission intensity factors based on standardised methods and verified data. EPDs are issued by independent organisations.
The 80:20 rule
An effective place to begin when estimating the greenhouse gas emissions of your supply chain is to use the 80:20 rule, also known as the Pareto principle. This rule states that, in many situations, 80% of the effects come from 20% of the causes.
In the context of carbon footprinting, the 80:20 rule implies that 80% of your emissions may come from 20% of your supply chain activities. Therefore, instead of trying to measure and report every single emission source, you can focus on identifying and prioritising the most significant ones. This can help you save time, money, and resources, while still capturing the majority of your environmental impact.
Supplier engagement
Supplier engagement is essential for businesses looking to measure and reduce their greenhouse gas emissions. By adopting some effective strategies, businesses can encourage their suppliers to measure and share their emissions data, creating value for both parties and for the planet:
Inform your suppliers about your business’s emissions reduction targets and ask them to join or support your efforts.
Offer incentives, such as preferential contracts, or recognition, to encourage your suppliers to reduce their emissions.
Suggest training, tools, or resources your suppliers can access to help them measure and reduce their emissions.
Request that your suppliers report and disclose their emissions and actions, then provide them with feedback and recognition.
Look for opportunities to partner with your suppliers on joint projects or initiatives, such as renewable energy procurement or circular economy initiatives
Lifecycle emissions and grid carbon intensity
Many people assume buying locally produced products is better for the environment than buying imported goods, because it reduces the distance and emissions associated with transportation. However, this assumption is often misleading, as transportation is only one stage of the life cycle of a product or service, and often not the most significant one.
A comprehensive way of measuring the environmental impact of a product or service is to use a method called life cycle assessment (LCA), which considers all the stages and processes involved in creating, using, and disposing of a product or service, from raw material extraction to disposal or recycling. LCA can help businesses compare the environmental impacts of different products or services that serve the same function and identify potential emissions hotspots in their supply chain.
The environmental impact of a product or service can also be affected by the grid carbon intensity of the country where it was produced. Grid carbon intensity is a measure of the volume of greenhouse gas emissions per unit of electricity generated and varies by country, according to the mix of energy sources used (such as fossil fuels, nuclear, hydro, wind, solar, or biomass). For context, China’s grid carbon intensity is approximately four times that of Sweden.
Products or services where the production process requires a lot of electricity, such as electric cars or computers, will likely have a lower environmental impact if they are produced in a country with lower grid carbon intensity, such as Sweden, than if they are produced in a country with high grid carbon intensity, such as China.
Avoid these products to reduce your business’s carbon footprint
Products that have the greatest impact on the climate are those that use a lot of energy and resources. Reducing consumption and production of these products, and switching to cleaner and more efficient alternatives, can help businesses reduce their GHG emissions and protect the environment. A few products that have a big impact on a business’s carbon footprint are:
Fossil fuels: The burning of fossil fuels such as coal, oil, and natural gas, are the main source of human-caused greenhouse gas emissions, accounting for about 75% of the global total. Choose renewable energy sources, such as solar, wind or hydro and look to improve energy efficiency and reduce demand by using smart technologies, upgrading equipment, or optimising processes.
Animal products: The global food system is responsible for about a quarter of total GHG emissions, and animal products account for more than half of this. Reducing the consumption of meat and fish, especially from high-emitting sources such as beef or lamb, and shifting to more plant-based ingredients, can significantly lower food-related GHG emissions.
Cement: Cement is made from limestone and is the key ingredient in concrete, the most widely used building material in the world. Cement production requires a lot of energy and is responsible for about 8% of global greenhouse gas emissions, mainly from the chemical reaction that converts the limestone into calcium oxide and carbon dioxide.
Steel and iron: Steel and iron are the most common metals used in construction, their production requires a large amount of energy and raw materials to produce, and they emit carbon dioxide and other pollutants during the process. For many purposes, steel or iron can be switched for low-carbon steel, recycled scrap metal, wood, or aluminium, which is lighter and more recyclable.
Synthetic fertilisers: The production of synthetic fertilisers consumes a lot of natural gas and emits a large volume of carbon dioxide (CO2). Many synthetic fertilisers contain nitrogen, and their application emits N2O, a GHG that is 265 times more potent than CO2. Synthetic fertilisers can be replaced with organic alternatives, and other sustainable practices, such as crop rotation, intercropping, and composting.