Client
Expertise
Supply chain engagement
Impact
Supplier capacity-building and engagement to drive emissions reductions across the supply chain and assess progress against science-based targets.
CHALLENGE
How can manufacturers inspire climate action among their suppliers?
An organisation’s carbon footprint doesn’t end at its premises. Indirect emissions across a company’s value chain can make up 70-90% of its footprint; and are thereby out of most organisations’ direct control. It makes measuring these indirect emissions, let alone tackling them, a much more complex undertaking.
From manufacturing to agriculture to pharmaceuticals, most industries will find that their procurement decisions fuel their carbon footprints and tackling these emissions may seem daunting. For most organisations, 20% of their suppliers contribute 80% of their supply chain-related emissions. Targeted engagement with these key suppliers will lead to deeper and more impactful emission cuts.
As a specialist in roof windows and skylights, VELUX saw an urgent need to deliver sustainable and healthy homes. The Danish manufacturer is making sustainability an integral part of its DNA and has reduced its Scope 1 and 2 emissions drastically. However, VELUX knew it had to tackle its supply chain emissions with dedicated carbon reduction programmes to achieve its near-term science-based target.1 The windowmaker wanted to understand to what extent purchased materials affect its carbon footprint. The goal for VELUX was to use these insights to work with suppliers at a deeper level. More so, the company recognised that – as a large customer – it can help suppliers calculate their emissions.
Scope 3 emissions
Indirect emissions (which do not fall under Scope 2 emissions) that can be found across an organisation’s value chain. It covers the emissions generated by suppliers, distributors and consumers, e.g., through the purchase of services and goods, business travel and waste in operations. It also encompasses activities like leased assets, transport and distribution, the use and disposal of sold products and the impact of any investments. The Greenhouse Gas Protocol’s Scope 3 Standard has identified 15 categories across upstream and downstream activities.
Learn moreSOLUTION
Targeting the key materials and suppliers
VELUX has been working with the Carbon Trust since 2017 to make sustainability truly part of its company nature. Since most emissions arise in the supply chain, VELUX knew it needed to engage directly with its suppliers to get better Scope 3 data and drive real reductions across the supply chain. To support VELUX with its supply chain climate action programme, we:
Measured the carbon impact of the entire value chain. It revealed that 98.5% of the VELUX footprint comprises Scope 3 emissions. Of this, 57% comes from materials going into production – a key focus for decarbonisation.
Evaluated the manufacturer’s key purchased materials and components to identify priority suppliers and materials to focus on.
Created a guidebook for suppliers. VELUX uses this to engage its suppliers through CDP. It outlines the data expected from suppliers, how they can collect it, and what ‘good’ data looks like. It also highlights which data would not meet the Greenhouse Gas Protocol and the Science Based Targets initiative standards.
Designed a tiered engagement approach and co-delivered workshops for VELUX suppliers. In an initial phase of supplier engagement, we helped VELUX build supplier capabilities and set expectations with regards to data reporting and continuous improvement.
Continued to support VELUX in improving the quality of the company’s Scope 3 footprint, and the insights it can obtain from it. The Danish manufacturer can now confidently measure and assess its climate progress yearly.
IMPACT
A springboard for sustainable procurement
By investing time and resource into engaging with suppliers, VELUX has been able to embed sustainability into the supply chain. Over the course of three years, the company’s supplier response rate via CDP has grown consistently. More importantly, VELUX has made it easier for its suppliers to start their data collection journeys in line with VELUX expectations and set a strong foundation for climate action.
VELUX’s CDP response rate from suppliers grew to 87% following delivery of the company’s supplier workshops and guidance pack. Consequently, VELUX receives more supplier-specific data and obtains a more accurate picture of its footprint.
Analysis of the company’s carbon footprint allows VELUX to focus its resources on areas that provide the biggest benefit, such as increasing supplier performance standards, and exploring new product design and innovative business models.
Greater one-to-one and one-to-many relationships with suppliers that are predominantly responsible for VELUX’s supply chain emissions. This provides a strong basis of trust and collaboration when tackling the challenge of reaching Net Zero emissions.
Helping suppliers build their own capabilities is a ‘win-win’ outcome and creates a multiplier effect of positive change. Suppliers become more competitive, as well as more resilient.
If you don’t understand how your supply chain works, it becomes complicated to direct your climate action to the right targets. To act quickly, we need to engage with suppliers at a deeper level and a simple email reminding suppliers of their requirements won’t suffice. The support we received as part of our outreach and mentoring program with suppliers was invaluable and the Carbon Trust’s presence as part of our workshops was of real value in bringing suppliers along on the journey. The toolbox we have created in conjunction with the Carbon Trust gives us a valuable resource to support our suppliers.
1 VELUX commits to halving its Scope 3 emissions by 2030 compared to 2020 levels. This target aligns with what science says is needed to limit global warming to 1.5C.
