Pathway 1: Placing greenhouse gas data at the core of business decisions
To achieve rapid decarbonisation and net zero targets, retailers need to fully understand sources of greenhouse gas emissions across the value chain, and to embed decision making that prioritises and targets the major emissions hotspots.
Retail supply chains are diverse and, in many cases, complex. The degree of visibility and control retailers have varies markedly between different sectors (e.g. for grocers compared to retailers of electronic goods) and between operational structures (e.g. for branded products compared to own label). Consequently, the first step for any retailer should be to understand the company’s carbon footprint profile, and to use those findings to guide priority actions.
In general terms, as summarised in Section 2.1, scope 3 emissions from upstream supply chains and downstream product use account for at least two thirds of retailers’ greenhouse gas emissions. As such, proactive engagement with suppliers and, to varying extents, with customers, will be essential to significantly decarbonise value chains. In order to maintain momentum and build the commitment from leadership teams, clear targets with public declarations provide a useful framework for developing decarbonisation plans.
One of the most effective tools for embedding carbon-based decision-making is the introduction of an internal price on carbon. Simply, this means that a financial price – such as £20 per tonne CO2e – is adopted internally, such that major decisions such as CAPEX investments and procurement selections take account of greenhouse gas implications. Such initiatives are designed to anticipate expected future mandatory carbon pricing by governments, thus placing companies that adopt internal pricing in a state of readiness for future policy developments.
When viable efforts to decarbonise have been exhausted, there will likely be residual emissions which, to achieve net zero, will require carbon removals or other offsets. This is a rapidly evolving theme within the climate agenda, which is fully discussed in this section in terms of both how and when to use carbon offsetting and removal, and the different means of doing so.