Google and Amazon made headlines earlier this month for misleading on their carbon footprint by not reporting on scope 3 emissions, which comprises the majority of their impact. But this is no anomaly.
For these giants of the internet, most emissions do not come from scope 1 (on site) or scope 2 (energy supplied directly to the company in the production of the goods or services) activities. Rather, the substantial greenhouse gas (GHG) emissions come from any number of indirect interactions in the upstream supply chain - what are referred to as "scope-3 emissions".
Research by the University of Sydney's Centre for Integrated Sustainability Analysis (ISA) on "pain-free scope 3" more than a decade ago showed not only that a significant proportion of emissions comes from organisations' indirect supply chains, but also that, if only focusing on a few orders of production, erroneous or insignificant action may occur because hotspots can lie in unexpected areas. For a textile or car company to hope to capture even 80 per cent of their footprint, for example, would require scrutinising more than 100,000 supply-chain paths up to fourth order - much more than scopes 1 and 2, where much of the world is focused.
Mindful of trade-offs between carbon and other environmental and social impacts, UNSW and ISA published a world-first synthesis of globalisation a few years ago. It summarised the out-of-sight, out-of-mind impacts from trade, where rich countries outsource to poor countries, whose production on our behalf can lead to a deterioration of their local environments which we don't need to regulate - for example, air pollution in China, the "factory of the world". However, as has been highlighted recently with the mega-fires, smoke and now COVID supply chains, we are, ultimately, part of the same interconnected ecosystem.
In a world where global value chains are perhaps more relevant than labels stating in which final country something is produced, incorporating scope-3 impacts means we do not leave out key inputs, no matter how far back in the supply chain they accumulate. Where the carbon footprint is concerned, this means all carbon dioxide (or equivalent) emissions created in the production and consumption of a good or service are accounted for - and, thanks to advancements in research, data availability and supercomputing, scope-3 impacts are routinely interrogated to a high degree of accuracy and in near real time.
Quantified using input-output (IO) analysis, footprinting, or "consumption-based accounting", is used at the highest levels for any economic research question related to environmental or social impacts. Those embracing IO include the World Trade Organisation, Eurostat and the UN Sustainable Development Solutions Network Dashboards Reports. IO has enabled Structural Path Analysis, which scans and ranks the top supply chain nodes and paths, conveniently listing the hotspots for urgent action. IO also overcomes issues of comparability, since it draws on national accounts and international statistics to United Nations standards.
So should Google and Amazon, and others in the report, be reprimanded for an incomplete representation of their impacts? Expert roles to improve organisational sustainability are increasingly common, however scope-3 emissions are not universally quantified or mandated.
Yes, software does exist that can routinely quantify scope-3 emissions. There are also consultants and researchers who model global sustainability footprints. But things get complicated when people refer to "carbon footprints" and other indicators, using different definitions and data that may not be comparable across products, industries or countries. With the bird's-eye view afforded by scope 3, organisations can make significant improvements, even if the actors may at first appear outside the traditional boundary of control, being the physical "factory gate".
IO, created by Nobel Prize-winning economist Wassily Leontief to demonstrate the relationship between consumption and production in an economy, is unique in its ability to incorporate the entire supply chain using standardised data - and has extended the footprint globally, aided by innovations and technology enabling the analysis of billions of supply chains.
It has been said that one of the biggest obstacles to regulating uptake of scope-3 footprinting lies in communicating its amazing ability to interrogate all impacts across global value chains. Indeed, we have the tools to measure and model our entire carbon footprint - and it takes the guesswork out of which actions are required, and where, to tackle climate change.
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