As a follow-up to the two-day sustainability meeting RCC co-hosted with the Retail Industry Leaders Association (RILA), we wanted to provide you with a brief overview of emissions inventories and reduction strategies, and hear your thoughts on how RCC can better support you in this area.
Emissions inventories and their benefits
Emissions inventories can be a great tool for retailers to better understand the type and quantity of greenhouse gas emissions being generated on-site and throughout supply chains. With this knowledge, companies can develop reduction strategies that have a multitude of benefits, including reducing risks associated with climate change, improving brand relevancy and reputation, and providing data for corporate responsibility reports. Beyond this, emissions inventories can also highlight areas where operational performance can be improved which can help reduce overall costs.
Scope 1, 2 & 3
Within emissions inventories, there are three scopes to consider that deal with emissions generated both on-site (at company locations) and off-site (throughout supply chains and company operations). Many retailers choose to tackle Scope 1 and 2 before gradually pulling in elements of Scope 3.
- Scope 1 – Onsite emissions resulting from company facilities and transportation
- Scope 2 – Offsite emissions including those associated with energy purchased from utilities.
- Scope 3 – Other offsite emissions including waste disposal, product use, business travel, etc.
Things to consider
Evaluate what others are doing – When setting your own targets, it can be beneficial to evaluate the goals and targets of peer companies.
Set a baseline – As a first step, it is important to calculate your company’s carbon footprint to set a baseline for energy use and packaging.
Collect data – Evaluate how your data is being collected and see if there are areas for improvement. Collecting and analyzing data can take a significant amount of time so it is important to allocate the necessary time and resources to this stage while setting boundaries for data collection (both for your baseline and ongoing collection). For example, you may only want to assess the facilities and operations your company legally owns (financial control approach) or look at the facilities you operate where you can influence policies (operational approach).
- Helpful data can be found on utility invoices or you can contact utility companies to get more information.
- Since many retailers lease space in landlord owned facilities, there are additional considerations to keep in mind. For example, when negotiating leases, you can request that information and data be built into the contract. Alternatively, there are ways to estimate emissions for leased assets if you are not seeing invoices directly.
- The scope of data to gather can be overwhelming. An incremental approach may be the best option when planning the scope of your strategy.
Determine your approach and set targets – Based on your data and company goals, set science-based targets for the various scopes. Some retailers choose to gradually incorporate elements of scope 3. Targets are considered science-based if they align with the Paris Agreement and the goal of limiting global warming to well-below 2°C above pre-industrial levels. An example of a target could be: reducing fossil fuel-based energy consumption by 50% by 2030 or reducing greenhouse gas emissions by 80% compared to a chosen baseline year.
- There are various organizations that can support the development and validation of targets, such as the Science Based Targets Initiative which is a global collaboration between the Global United Nations Compact (UNGC), World Resources Institute (WRI), CDP, World Wide Fund for Nature (WWF) and one of the We Mean Business Coalition commitments.
- Quantis is another organization that works internationally to support companies in the development of science-based targets.
Develop implementation plans – Develop a plan including actions and resources that will be required to meet your targets within a predetermined timeframe.
Collaborate – Throughout all of these steps and considerations, it is important to collaborate with various departments within your company (e.g. accounting, merchandising, sustainability, etc.) and seek external help from consultants and experts, where necessary.
Depending on targets, there are various ways to reduce emissions from changing transportation modes to reducing product packaging. For example, emission levels can vary depending on if inventory is transported via trains or trucks. Industry witnessed this first-hand in February 2020 when railway traffic was halted across the country due to pipeline protests and blockades forcing many companies to rely on trucks for the transport of goods. For many, this resulted in an increase in carbon emissions making it difficult to achieve short-term goals.
There can also be setbacks in emission reductions due to extreme seasonal weather conditions. For instance, an increased dependence on heating during a cold winter can contribute to higher than expected emissions. Although these setbacks are out of a company’s control, it is important to factor in the possibility of setbacks when planning targets and adjust reduction strategies accordingly. For example, it can be beneficial to make buildings more energy efficient and promote the use of reusable energy, whether in transportation fleets or buildings.
E-commerce is also a rapidly growing area that contributes to emissions. In particular, same-day delivery and set-time delivery can limit the ability to bundle deliveries together resulting in multiple trucks going to the same location. There can also be higher rates of product return since consumers do not have the ability to test a product or try on apparel compared to a brick and mortar store. E-commerce will be an important area of focus for emissions reduction strategies moving forward and many couriers are working on best practices to improve carbon footprints.
Beyond this, there are various reduction strategies that can be explored once you collect data, set a baseline and determine your targets, particularly when collaborating with colleagues with different accounting, merchandising and environmental backgrounds.