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Scope 3: How to successfully navigate supplier-specific emissions with Celonis
Two facts framed the fourth and final webinar of Celonis’ Sustainability Transformation Week earlier this summer. Firstly, Scope 3 emissions can account for up to 90% of a company’s carbon footprint, according to Celonis partner IntegrityNext. Secondly, 82% of webinar attendees cited emissions data collection as among the biggest challenges to driving supply chain decarbonization.
Taken together, these statistics reveal a major obstacle to, or disconnect in, the achievement of widespread corporate sustainability transformation. Without a data-defined foundation for measuring and optimizing emissions, businesses simply don’t have the tools to reduce their carbon footprint. However, thanks to the partnership between Celonis and sustainability pioneers such as IntegrityNext and Climatiq, this disconnect could soon be a thing of the past.
Siloes and suppliers – the Scope 3 super challenge
Before looking at Celonis’ solutions in greater detail, it’s worth circling back to examine the nature and basis of this emissions data challenge. Historically it has been a major headache even gathering an organization’s data for Scope 1 emissions (from sources that it owns or controls directly) or Scope 2 emissions (caused indirectly from the generation of power it needs to operate). Collating and analyzing this data is typically conducted manually, by siloed sustainability teams trying to analyze siloed sustainability data from multiple spreadsheets. Reporting tends to be retrospective and often on an annual basis, offering little in the way of actionable insights.
Scope 3 data is an altogether different level of complexity and challenge to access. These are emissions not produced by the company itself, but from those it is indirectly responsible for from its upstream and downstream supply chains and value chains. So to measure, let alone optimize, Scope 3 emissions, businesses need to access the carbon footprint of its suppliers. Realistically, there’s no viable (commercially practicable) means to manually gather this breadth of data at scale.
But thanks to the development of the Celonis Sustainability Layer, manual solutions are no longer a factor.
The Sustainability Layer (and beyond)
The Celonis Process Intelligence platform is data agnostic, collating, standardizing, and analyzing all business process data – from ERP systems and third-party data platforms to in-house operational data. The Sustainability Layer integrates emissions and ESG data from specialist partners (such as IntegrityNext and Climatiq) into the platform. It marries all of this information with Process Intelligence and artificial intelligence to provide fast, continuous, automated, and integrated sustainability reporting.
Using out-of-the-box sustainability-focused apps, it also enables emissions performance tracking and target setting, and helps identify viable options to reduce emissions. Vitally, the Sustainability Layer enables users to access the crucial supplier-centric data that’s essential to Scope 3 reporting. Let’s look at two of these apps in greater detail to discover how they unlock supplier emissions data.
The Material Emissions app
Our Material Emissions app offers a direct route to improving supplier-specific emissions. The app enables organizations to measure, manage, and reduce Scope 3 emissions stemming from materials produced by its suppliers.
With our partner Climatiq’s carbon calculation engine integrated into the Material Emissions app, businesses are able to accurately map, quantify, and interrogate carbon-emission hotspots within their procured materials. This analysis can be segmented by a range of variables including material spend and weight, as well as by geography, individual supplier, business processes, or procurement practices. The app also lets users request calculations from Climatiq for any unquantified materials, in addition to incorporating supplier specific emission factors, to facilitate a hybrid approach of using secondary data when primary data is not yet available.
Target Tracking with the Material Emissions app: Define a target based on a baseline year and compare your current performance with your goals
Beyond measuring material emissions, the Celonis system can set and track company-wide reduction targets from a defined baseline year. Again, performance against these emissions KPIs are interrogable across a number of dimensions – including suppliers. In this way any element of the procurement process that is impeding the achievement of Scope 3 targets can be addressed.
Finally, the app can turn insight into action by highlighting emissions reduction opportunities – such as switching to alternative (lower emissions) suppliers – that don’t compromise business performance. The sustainability benefits on offer from such opportunities are accurately quantified and shared with key stakeholders.
The Sustainable Spend Management app
Within the Celonis Sustainability Layer, our Celonis Sustainable Spend Management app offers another out-of-the-box solution to help businesses navigate supplier-specific emissions. Focusing on supply chain due diligence, it provides automated measurement and optimization of sustainable spend performance. Taking supplier data from ERP procurement systems, the app leverages information from IntegrityNext to provide an in-depth look into supplier sustainability ratings. These apply sustainability scores to specific suppliers across environmental protection, as well as a broad range of other ESG categories including human rights and labor, health and safety.
At a glance companies can see how much of their spend is covered by sustainable suppliers, and what percentage is considered at risk. The app pinpoints which suppliers across their entire value chain pose a potential threat to their Scope 3 targets.
Sustainable Spend Management app: The Executive View shows high-level KPIs and analyses to help you report on your suppliers.
Being able to integrate this information with the operational business insights within the Celonis platform provides procurement and category managers with a data-driven prioritization of suppliers based on spend, risk, and sustainability. Directly from the platform, users can open a dialogue with such providers, requesting those without a sustainability rating to fill out a supplier assessment with IntegrityNext.
But while the sustainability credentials visualized in the app are provided at the most granular level, its supplier analysis and interactions are both systematic and scalable. Using intelligent automations, users can trigger streamlined actions for rating requests and follow up at scale with Celonis Action Flows. These decision flows can be configured to determine – by supplier scale, importance and relationship status – whether rating requests should be conducted by specific procurement personnel or if rating requests should be automatically triggered in IntegrityNext. In this way, by having most of their procurement spend considered sustainable, businesses can take a big stride forward to achieving their Scope 3 targets and goals.
The IntegrityNext Carbon Emissions Navigator
The drive to measure and reduce supplier-centric emissions gets a major boost from IntegrityNext’s Carbon Emissions Navigator – its command center for supply chain decarbonization. In a single dashboard, the Navigator brings together two vital data sets:
Corporate carbon footprint assessment data: providing transparency on suppliers’ on their Scope 1, 2, and 3 emissions, while quantifying their emissions reductions and carbon neutrality targets. This creates a holistic, data-driven picture of suppliers’ sustainability commitments.
Product carbon footprint assessment data: enabling users to track emissions of purchased goods and services procured from suppliers. The platform provides an easy interface for suppliers to upload the carbon footprint data for their products, which can be leveraged by Navigator users to quantify their own Scope 3 emissions data.
The platform enables users to drill down into the granular data as well as produce comprehensive, business-wide reporting to give organizations the carbon intelligence they need – from measurement through to tangible action – to reduce greenhouse gas (GHG) emissions.
The future
Sustainability looks likely to feature ever-larger in corporate strategies going forward. On the face of it, understanding and accurately reporting Scope 3 emissions is a complex process. But with GHG emissions regulations tightening in every corner of the world, it’s a process that will have to be successfully navigated by most businesses. Celonis and its key sustainability partners, such as IntegrityNext and Climatiq, are committed to putting actionable emissions insights within easy reach of our customers.
For more information about navigating Scope 3 emissions make sure you watch the on-demand webinar, which contains lots of practical guidance on using the Sustainability Layer as well as customer success stories, as the other three presentations from Sustainability Transformation Week. In addition, take five minutes to review how Celonis can help drive your sustainability transformation.
