Retailers Tackle Scope 3 Emissions with Innovative Strategies: McKinsey

Scope 3 emissions, the indirect emissions generated throughout a company’s value chain, are a significant part of a retailer’s carbon footprint. These emissions encompass activities from sourcing and manufacturing to transportation and beyond. McKinsey’s report, “Retailers’ Climate Roadmap: Charting Paths to Decarbonised Value Chains,” underscores the complexities retailers face in reducing these emissions. The report states that the path to reducing Scope 3 emissions is often complex and challenging, akin to navigating a “particularly Byzantine maze.”

Strategies for Scope 3 Emission Reduction

The report identifies seven key areas where retailers can focus their decarbonisation efforts:

1. Transitioning to clean and renewable energy in supply chains.
2. Reducing farming emissions from livestock management.
3. Adopting regenerative practices in plant-based agriculture.
4. Increasing circularity of products and packaging.
5. Reducing waste and improving process efficiency.
6. Reducing emissions in transportation.
7. Transitioning from animal to plant protein.

By combining these actions, retailers could achieve a 55-65% reduction in Scope 3 emissions by 2030. However, some initiatives may come with significant costs. Actions that do not increase system costs could still achieve a 12-17% reduction in emissions.

Leveraging Decarbonisation Levers

The report also outlines four key “levers” that retailers can use to drive down Scope 3 emissions:

1. Cost-effective near-tier levers: Engaging with direct suppliers and consumers to promote renewable energy adoption and sustainable consumption habits.
2. Cost-effective far-tier levers: Collaborating with suppliers and industry partners to implement cost-saving or cost-neutral sustainability measures.
3. Costlier near-tier levers: Working closely with tier one, two, and three suppliers to spark innovation and improve the feasibility of emissions reduction strategies.
4. Cost-prohibitive far-tier levers: Collaborating with value chain partners to invest in circularity and recycling technologies.

By adopting these strategies and leveraging these levers, retailers can make significant progress in reducing their Scope 3 emissions, aligning with broader sustainability goals and contributing to a decarbonised future.