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- [Narrator] Sustainability initiatives
are becoming a priority in all industries.
As businesses continue to move towards net zero,
companies are looking to their supply chains
to see where they can reduce their carbon footprint.
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Greenhouse gases are often classified
in one of three categories: scope 1, 2, and 3.
To be able to better fight against these emissions,
it's crucial to understand their source, and what they mean.
- Scope 1 emissions are your direct carbon emissions
of your business, what your business generates.
- [Narrator] These emissions would include
anything produced by a company's building,
vehicles, and any equipment contained inside,
such as a boiler or furnace.
- Scope 2 emissions are the indirect carbon emissions,
such as your purchasing of electricity.
- [Narrator] This refers to the emissions
that are generated at another facility,
such as a power station.
For example, facilities using coal generated power
have higher scope 2 emissions
than one using solar or hydroelectric energy.
- And your Scope 3 emissions
are the emissions of your suppliers
and the businesses you do business with
that directly impact your business
through your purchases.
- [Narrator] Scope 3 emissions are indirect emissions
and can be difficult to track
since they're out of a company's direct control.
This includes supply chain emissions,
as well as those from the use of a product.
To put it simply, scope 3
are the scope 1 and 2 emissions of companies and people
that they're partnered with.
For example, transporting products from a supplier
or employees commuting to and from work.
By understanding the difference
between three types of emissions,
companies can track them more effectively
and improve the efficacy of sustainability initiatives.
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- A sustainable supply chain
is one that knows their data points
and continuously improves upon those data points,
but also a supply chain that has a circular view.
- [Narrator] The journey to abate carbon footprint
demands equal participation of all stakeholders,
including companies and suppliers.
The key is to focus initiatives
through value chain mapping,
emission assessment, and utilization of data metrics.
Companies can then collaborate
with suppliers and customers
to create a long-term sustainable impact.
- Each time people produce products,
their customers will be asking
how do they measure their sustainability,
and what happens to the products afterwards?
So the idea from that is putting the metrics in place
and continuing to monitor that circular supply chain.
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- [Narrator] MHI has launched an initiative with Guidehouse
known as Supplier Leadership on Climate Transition,
or Supplier LoCT, to help MHI members
traverse the de-carbonization journey
and navigate towards Net Zero.
- And that program will be open
to members to be able to be trained
and help them get up to speed faster
on the sustainability topics.
- Supplier LoCT is a consortium
of 20 of the largest companies in the world.
What these companies have done
is put together a program
that not only offers the tools
to complete the carbon 1, 2, and 3 footprints,
but also the abatement roadmaps,
which are important to actually having a plan
on how to reduce your carbon emission in your business.
- [Narrator] The journey to a more sustainable supply chain
may not be easy,
but the first step is to start understanding
the types of emissions and begin tracking them
within your own operations.
Take the next step towards a sustainable operation
by starting your scope journey.
Find out how you measure up to others in the supply chain
and discover what trends await
in the 2023 MHI Annual Industry Report
available now and make sure you subscribe to MHIview
to keep up with the latest industry updates.