Going into this project, we expected that things like electricity use and air travel would be large contributors to our greenhouse gas footprint – and this turned out to be true. But, frankly, we were surprised at the results because the impact of one of these was so disproportionately large. We found that our employee air travel makes up about 80 percent of our greenhouse gas footprint and has consistently done so for the last few years. The other two big components are employee car travel and office electricity use, which each account for about 10 percent of our GHG footprint. We also know that our current method for calculating employee car travel does not reflect all car miles, so we expect that the percentage for this would actually be slightly higher.
What this experience tells us is that the environmental footprint of Hitachi Consulting is largely (90 percent at least) based on activities that occur on our behalf but are not directly tied to our actual operations. For example, we don’t own or operate the airplanes and cars that our consultants use to get to our clients’ locations. But our clients expect us to work closely with them, so this is a mostly unavoidable consequence of our business model.
The Greenhouse Gas Protocol was jointly convened in 1998 by the World Business Council for Sustainable Development and the World Resources Institute. In GHG Protocol parlance, the indirect emissions that occur due to activities outside of the electricity we purchase are called Scope 3.
Definitions according to the GHG Protocol:
- Scope 1: All direct GHG emissions.
- Scope 2: Indirect GHG emissions from consumption of purchased electricity, heat or steam.
- Scope 3: Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g., transmission and distribution losses) not covered in Scope 2, outsourced activities, waste disposal, etc.
Now that we understand our footprint and the big drivers for this, we are looking at creative ways to reduce the impact from our travel without harming our ability to deliver the great service that our customers expect, such as doing more telecommuting, leveraging video communications and Web-based conferencing, scheduling staff to be offsite more frequently, and looking at using carbon offsets. This is all still a work in progress, but our journey could not have started without the visibility into our footprint that we gained by implementing information systems to help us track this.
Why would this anecdote about our Scope 3 environmental footprint be of interest to you?
1. Scope 3 is a large part of the footprint of most companies.
It turns out that in many other industries, Scope 3 emissions also make up a very large percent of a company’s footprint. Some estimates put it between 70 percent and 95 percent on average for many industries. A report by NSF and Trucost calculates the average Scope 3 to be 69 percent. Given this, there is a good chance that many of the readers of this article are part of a company with large Scope 3 emissions.
For example, at the extreme end, a construction company called Webcor Builders recently completed a Scope 3 footprint analysis and what they found is startling – 99.6 percent of their GHG footprint occurred outside of their operations. The majority of their overall footprint was embedded in the construction materials they get from suppliers, such as concrete, steel and glass. Now that they know this, they are working with these suppliers to come up with creative ways to reduce Scope 3 emissions.
The global home furniture retailer IKEA did a similar analysis of their Scope 3 emissions and calculated that it accounts for 82 percent of their footprint. In their case, they included not only the furniture lifecycle but also things like customer transportation to their stores. Based on this information they are looking to locate more of their stores near public transportation, provide shuttle buses and bikes with trailers, and are working with suppliers to improve their efficiency and reduce the footprint of their products. See IKEA’s Never Ending List of all of the things they are doing to improve sustainability.
2. Customers expect suppliers to provide them this information.
Across many industries, customers are expecting their suppliers to provide information on the environmental footprint of their products and services.
Wal-Mart and the U.S. government in particular – the two largest buyers of goods and services in the world – both have announced their initiatives to start collecting this information, as I have discussed in a previous article. Recently, Wal-Mart announced additional details related to sustainable agriculture that “will launch in 2011 for top producers in our global food sourcing network. This will help us learn about the water, energy, fertilizer and pesticide used per unit of food produced.”
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