1 00:00:00,067 --> 00:00:03,360 (delicate ethereal music) 2 00:00:03,360 --> 00:00:04,830 - [Narrator] Sustainability initiatives 3 00:00:04,830 --> 00:00:07,980 are becoming a priority in all industries. 4 00:00:07,980 --> 00:00:11,100 As businesses continue to move towards net zero, 5 00:00:11,100 --> 00:00:13,560 companies are looking to their supply chains 6 00:00:13,560 --> 00:00:16,356 to see where they can reduce their carbon footprint. 7 00:00:16,356 --> 00:00:17,340 (delicate ethereal music) 8 00:00:17,340 --> 00:00:19,620 Greenhouse gases are often classified 9 00:00:19,620 --> 00:00:24,620 in one of three categories: scope 1, 2, and 3. 10 00:00:24,690 --> 00:00:27,360 To be able to better fight against these emissions, 11 00:00:27,360 --> 00:00:30,990 it's crucial to understand their source, and what they mean. 12 00:00:30,990 --> 00:00:34,740 - Scope 1 emissions are your direct carbon emissions 13 00:00:34,740 --> 00:00:37,800 of your business, what your business generates. 14 00:00:37,800 --> 00:00:39,120 - [Narrator] These emissions would include 15 00:00:39,120 --> 00:00:41,430 anything produced by a company's building, 16 00:00:41,430 --> 00:00:44,580 vehicles, and any equipment contained inside, 17 00:00:44,580 --> 00:00:46,800 such as a boiler or furnace. 18 00:00:46,800 --> 00:00:50,280 - Scope 2 emissions are the indirect carbon emissions, 19 00:00:50,280 --> 00:00:53,490 such as your purchasing of electricity. 20 00:00:53,490 --> 00:00:54,840 - [Narrator] This refers to the emissions 21 00:00:54,840 --> 00:00:57,330 that are generated at another facility, 22 00:00:57,330 --> 00:00:59,580 such as a power station. 23 00:00:59,580 --> 00:01:02,460 For example, facilities using coal generated power 24 00:01:02,460 --> 00:01:04,740 have higher scope 2 emissions 25 00:01:04,740 --> 00:01:08,400 than one using solar or hydroelectric energy. 26 00:01:08,400 --> 00:01:10,560 - And your Scope 3 emissions 27 00:01:10,560 --> 00:01:13,740 are the emissions of your suppliers 28 00:01:13,740 --> 00:01:16,140 and the businesses you do business with 29 00:01:16,140 --> 00:01:18,390 that directly impact your business 30 00:01:18,390 --> 00:01:20,280 through your purchases. 31 00:01:20,280 --> 00:01:22,950 - [Narrator] Scope 3 emissions are indirect emissions 32 00:01:22,950 --> 00:01:24,330 and can be difficult to track 33 00:01:24,330 --> 00:01:26,880 since they're out of a company's direct control. 34 00:01:26,880 --> 00:01:28,650 This includes supply chain emissions, 35 00:01:28,650 --> 00:01:31,830 as well as those from the use of a product. 36 00:01:31,830 --> 00:01:33,690 To put it simply, scope 3 37 00:01:33,690 --> 00:01:37,650 are the scope 1 and 2 emissions of companies and people 38 00:01:37,650 --> 00:01:39,000 that they're partnered with. 39 00:01:39,000 --> 00:01:42,060 For example, transporting products from a supplier 40 00:01:42,060 --> 00:01:45,360 or employees commuting to and from work. 41 00:01:45,360 --> 00:01:46,800 By understanding the difference 42 00:01:46,800 --> 00:01:48,840 between three types of emissions, 43 00:01:48,840 --> 00:01:51,360 companies can track them more effectively 44 00:01:51,360 --> 00:01:54,760 and improve the efficacy of sustainability initiatives. 45 00:01:54,760 --> 00:01:56,040 (delicate ethereal music) 46 00:01:56,040 --> 00:01:57,390 - A sustainable supply chain 47 00:01:57,390 --> 00:02:00,000 is one that knows their data points 48 00:02:00,000 --> 00:02:03,060 and continuously improves upon those data points, 49 00:02:03,060 --> 00:02:07,380 but also a supply chain that has a circular view. 50 00:02:07,380 --> 00:02:09,540 - [Narrator] The journey to abate carbon footprint 51 00:02:09,540 --> 00:02:13,140 demands equal participation of all stakeholders, 52 00:02:13,140 --> 00:02:15,930 including companies and suppliers. 53 00:02:15,930 --> 00:02:17,910 The key is to focus initiatives 54 00:02:17,910 --> 00:02:19,650 through value chain mapping, 55 00:02:19,650 --> 00:02:23,910 emission assessment, and utilization of data metrics. 56 00:02:23,910 --> 00:02:25,560 Companies can then collaborate 57 00:02:25,560 --> 00:02:27,300 with suppliers and customers 58 00:02:27,300 --> 00:02:30,420 to create a long-term sustainable impact. 59 00:02:30,420 --> 00:02:32,040 - Each time people produce products, 60 00:02:32,040 --> 00:02:33,900 their customers will be asking 61 00:02:33,900 --> 00:02:36,000 how do they measure their sustainability, 62 00:02:36,000 --> 00:02:38,850 and what happens to the products afterwards? 63 00:02:38,850 --> 00:02:41,970 So the idea from that is putting the metrics in place 64 00:02:41,970 --> 00:02:44,808 and continuing to monitor that circular supply chain. 65 00:02:44,808 --> 00:02:46,110 (delicate ethereal music) 66 00:02:46,110 --> 00:02:49,020 - [Narrator] MHI has launched an initiative with Guidehouse 67 00:02:49,020 --> 00:02:52,560 known as Supplier Leadership on Climate Transition, 68 00:02:52,560 --> 00:02:56,070 or Supplier LoCT, to help MHI members 69 00:02:56,070 --> 00:02:58,350 traverse the de-carbonization journey 70 00:02:58,350 --> 00:03:01,110 and navigate towards Net Zero. 71 00:03:01,110 --> 00:03:02,970 - And that program will be open 72 00:03:02,970 --> 00:03:05,010 to members to be able to be trained 73 00:03:05,010 --> 00:03:06,960 and help them get up to speed faster 74 00:03:06,960 --> 00:03:09,000 on the sustainability topics. 75 00:03:09,000 --> 00:03:11,640 - Supplier LoCT is a consortium 76 00:03:11,640 --> 00:03:14,430 of 20 of the largest companies in the world. 77 00:03:14,430 --> 00:03:16,470 What these companies have done 78 00:03:16,470 --> 00:03:19,800 is put together a program 79 00:03:19,800 --> 00:03:22,830 that not only offers the tools 80 00:03:22,830 --> 00:03:27,540 to complete the carbon 1, 2, and 3 footprints, 81 00:03:27,540 --> 00:03:29,880 but also the abatement roadmaps, 82 00:03:29,880 --> 00:03:33,840 which are important to actually having a plan 83 00:03:33,840 --> 00:03:37,350 on how to reduce your carbon emission in your business. 84 00:03:37,350 --> 00:03:39,840 - [Narrator] The journey to a more sustainable supply chain 85 00:03:39,840 --> 00:03:41,580 may not be easy, 86 00:03:41,580 --> 00:03:44,010 but the first step is to start understanding 87 00:03:44,010 --> 00:03:46,830 the types of emissions and begin tracking them 88 00:03:46,830 --> 00:03:49,110 within your own operations. 89 00:03:49,110 --> 00:03:52,050 Take the next step towards a sustainable operation 90 00:03:52,050 --> 00:03:53,940 by starting your scope journey. 91 00:03:53,940 --> 00:03:56,910 Find out how you measure up to others in the supply chain 92 00:03:56,910 --> 00:03:58,770 and discover what trends await 93 00:03:58,770 --> 00:04:02,160 in the 2023 MHI Annual Industry Report 94 00:04:02,160 --> 00:04:06,180 available now and make sure you subscribe to MHIview 95 00:04:06,180 --> 00:04:08,763 to keep up with the latest industry updates.