speaker-0: Nexus. Published by GHD. Actionable Foresight.
speaker-1: Well most organizations talk about net zero, but for many the majority of their carbon footprint sits outside their direct operations in their supply chain. That's scope three emissions. Harder to measure, harder to influence, and increasingly critical to business performance. Welcome to Nexus Podcasts. I'm Ben Hall, Global Thought Leadership Manager at GHD. Today I'm joined by Greg Carly, head of sustainability for the Americas at GHD. to explore how leaders can move from scope three reporting to real scope three emissions reduction and turn this complexity into a competitive advantage. Well why now, Greg? Why have scope three emissions shifted from a sustainability issue to a board level strategic priority?
speaker-0: Thanks, Ben. It's great to be here today on an exciting topic. ⁓ it it's really about looking at greenhouse gas data in general and scope three data and specifically as much more than an environmental issue. There's a wealth of data, wealth of information, and it really helps to look at that information and data ⁓ in a deeper level as a metric and a a way to look at what is happening with your business performance. And when you start looking at it as a business performance issue. then the value you can extract out of that is incredible in terms of cost reduction or realizing revenues that you might not be aware of and really driving your business to a new level.
speaker-1: So for many organizations, scope three emissions re ⁓ represent the majority of their footprint. So when leaders confront that reality, what's the most common mistake they make?
speaker-0: Yeah, it is. I mean, it can be upwards of 70, 80, even 90% in some businesses that we see. I think the biggest thing is to focus on what matters and not try to do too much. You often see ⁓ because it is a complex space, there's a lot happening in your scope three emissions, there's 15 different categories, you can really spend a lot of time and try to boil the ocean, if you will. So ⁓ that's a mistake that can be made. And when you do that, you're not focusing on what's really material and what matters to your business. And focusing then on your scope three data, that's actually going to drive value and drive that performance that we talked about. So ⁓ it's really critical that you spend the time up front when you're doing that to to understand what is is really happening with your scope three data and then really using that data to leverage the opportunity on the back end to to really drive that business performance.
speaker-1: Yeah, it's it's an interesting point you made there about the seventy percent ⁓ data point. Do you find that when you speak to businesses and organizations, they're surprised at that number?
speaker-0: I think ⁓ they were originally, but now that we've had more conversations, they're they're understanding ⁓ the supply chain elements, right? How big a supply chain is and how impactful your supply chain can be to your business. ⁓ that's something that I think you know, most executive CEO type people understand. ⁓ they may not have thought about it before in those terms then, but ⁓ but when they start to think about it, there's a bit of an aha moment ⁓ that they have that really helps them. ⁓ say, ⁓ okay, I get it now and ⁓ and what can I do to make a difference here?
speaker-1: You mentioned there are fifteen scope three categories. Instead of trying to tackle everything, I mean you advocate in a recent series of articles on the Nexus about prioritizing high impact hotspots. What does this look like in practice?
speaker-0: So in practice, it really looks at, you know, using some estimation tools to understand what are the big impacts. What are the what of those 15 categories are really driving your supply chain and driving your agreement your scope three emissions? So, you know, use tools available. There's some really good estimating tools. They may or over underestimate, but at least they give you an order of magnitude of where to start. And then you can dive deep into that information. So you may see, ⁓ look, there's two of the 15 that are actually driving. our scope three missions, let's focus on those. Let's worry about getting better data in those spaces that's more meaningful and more impactful for the business, ⁓ rather than trying to get all 15. So it's really critical to do some level of a high level review and then, you know, drill down into what really matters and what's really impacting your supply chain.
speaker-1: Sounds like when you start to do this, it's a bit tricky and difficult at first, especially to quantify exactly what's needed. And then as you as you refine it and go along, it gets better and better and more accurate. Is that correct?
speaker-0: Absolutely, Ben. I think it's like anything, right? When you steer doing something for the first time, it can be complex and tricky. ⁓ but really by using that information year over year, starting to refine it, ⁓ you start to get you know, really good things happening. And this is where I think the role of reporting does play a strong element because it does force you to do the inventory and start to look at things, but the value isn't reporting. The value is really driving change. through ⁓ starting to reduce greenhouse gas emissions ⁓ through your supply chain or or or really look at how you can leverage your supply chain better.
speaker-1: Now there's clear difference between scope three reporting and actually reducing scope three emissions. How do organizations avoid becoming stuck in just sort of disclosure mode?
speaker-0: Yeah, I think I mean it's it's it's about taking that data and looking at what can be meaningfully done. You know, what can you do and from policy perspective, you know, travel is often a big employee travels and often a big scope three emission. ⁓ you know, what can you do to start changing policy and changing procedures and changing behavior ultimately is what happens and it's changing behavior ⁓ of your employee base so that they're interacting with the suppliers in the supply chain better. And then also, you know, impacting the the behavior of your supply chain. You know, working with them in collaboration to start to understand how you can reduce emissions. And typically then what we see is it's not re reducing emissions per se, but it's also reducing cost. So if the supplier can start to reduce cost of the product, that's something they can supply they can, you know, push back up to up to the ⁓ up to the the parent company, if you will.
speaker-1: You just mentioned something there about about ⁓ supplier collaboration. ⁓ that's actually really important, isn't it, too? Because if you treat I think in this art these articles you you said something about if you treat your suppliers as transition partners, you definitely get a better result long term, is that correct?
speaker-0: ⁓ absolutely, right? So when we start to think of our suppliers and vendors as partners in our product, right? Because when, you know, depending on what you're whatever you're building, whatever widget you're building, obviously the quality of that and the the the value of that and the brand that you bring to the table is a function of of your supply chain and your suppliers as well. So when you start to work in partnership with them rather than lean on them as a, you know, sort of that old school mentality of you know, beating the supplier into the ground or beat them, you know, ⁓ getting them into submission ⁓ by driving cost or driving things down, but rather engaging them, working with them, helping them do better as well, gives a better product, gives a better outcome for the supplier and gives a better outcome for the parent company.
speaker-1: I know it's a broad question, but how often, if you especially if you're working with a company who's new to all this, how often do you need to sort of be in contact with them to help them along the way? I mean, I know it it it it varies from company to company, but is it a regular thing? what would you recommend?
speaker-0: I think there's there's different different models, Ben, that you can use. ⁓ certainly when we're first working with a company, it can be quite intensive and working with them ⁓ week in, week out to help them understand their data, help them understand where they can improve. But at some point what we want to do is get the you know, get the training wheels off, if you will, ⁓ and get them moving forward themselves so that they can ⁓ be self sufficient. So, you know, sometimes we talk about ⁓ one of the goals here is to work ourselves out of jobs as consultants. ⁓ but ultimately then ⁓ it is about getting them self sufficient and doing this themselves, ⁓ so that they can move it forward. But it you know, initially would typically can be pretty ⁓ pretty intensive ⁓ interactions.
speaker-1: And you mentioned carbon ⁓ carbon data. And I I suppose that many organizations collect vast amounts of carbon data that don't really influence outcomes. How do you define what what good scope three data look like looks like? What is what is quality data?
speaker-0: Yeah. That's really really a tricky part. And that's where, you know, understanding your business, analyzing your business and looking at that data from a ⁓ you know, business ⁓ value perspective. So it starts with understanding what's material to the business. What are the drivers? What's pushing your performance? Where can you ⁓ le you know leverage change? So understanding those material aspects and then starting to collect the right information. right data to sort of drive that forward ⁓ and make that make that work. So it's really aligning what you're trying to do with the with the information you have and meeting that in the middle. ⁓ you do need to QAQC, you do need to check that information, ⁓ because it's, you know, garbage in, garbage out, right? So it's really important to be able to to be able to rely on that information. So verification, validation, ⁓ and understanding that you have good quality information, the same way you would do finance data. The same way you would do ⁓ data for your your your your safety or or ⁓ or you know, your your employee base. So it's really important to be able to get get that information right and then you can make good, solid business decisions on it.
speaker-1: So let's talk about commercial upsides ⁓ of all of this. For executives who sort of view this as compliance driven, something they have to do, tick boxes, et cetera. How do you sort of how can you t describe to us the clearest commercial upside from tackling scope three emissions?
speaker-0: Well, I think it's it's pretty clear, right? If you're, you know, if you look at that greenhouse gas data as a marker for overall business performance data, scope one, scope two, and scope three, then because it touches on so many aspects of an organization, right? It touches on operational efficiency, it touches on you know, different elements of how you're using energy, how you're using materials in your processes. If everybody down the chain in the supply chain is doing that, then everybody's gonna get more efficient, everyone's gonna save costs. And then ultimately it it trickles back up, right? So if your suppliers can do it cheaper, they're gonna be able to pass some of that savings along to you and up up and up the chain. And it it it compounds itself. So the the simplest one is is is cost effectiveness, right? And really redoing cost ⁓ is is a key one. I think the other part is we've touched on in the conversation, Ben, is the value you get out of a better engaged supplier base. And the quality ⁓ improves, ⁓ other aspects of performance improves. Which may not have as much of a direct, you know, cost benefit that you can always ⁓ quantify. But, you know, if the material is or the product they're providing is a higher quality, you're gonna have less defects in the end of the product or less less issues along there, which is gonna save you cost in your production as well.
speaker-1: Well let's ⁓ take a look ahead. ⁓ five to ten years from now, what will differentiate organizations that lead on scope three emissions from those that actually fall behind?
speaker-0: Yeah. I think it really comes down to looking at scope three emissions as a strategic business value. And when you're starting to look at as a a lever that you can use in your business to drive performance and set yourself apart from your competitors, that's where that's going to happen five to ten years down the road. And and those who who have the foresight to think of it in that way, ⁓ they're really gonna be able to have a strategic advantage, which is gonna be ⁓ make them more competitive, make them more resilient to change in the business. ⁓ and we haven't touched too much on the supply chain resilience today, Ben, but that's a whole other piece, right? Yeah. You know, we're seeing that happen right now, real time in the world. ⁓ having a resilient, strong supply chain also has huge benefits to yourself. ⁓ and that's really comes down to understanding your supply chain. And a great way to do that is, you know, using the lens of scope three emissions to really understand your supply chain.
speaker-1: That's a great place to finish. Greg Carly, thanks very much for your time there and for your insights. Well, if today's discussion makes anything clear, it's this. The organizations that treat scope three reporting as insight, not just compliance, will build more resilient, competitive supply chains. You can read the full two-part Nexus weekly column series with Greg Carly on Scope 3 emissions and reporting on the Nexus platform. And if you haven't already, subscribe via the Nexus homepage to receive our latest articles, podcasts and videos directly. Thanks for listening. We'll see you next time.
speaker-0: Brought to you by Nexus, published by GHD. Actionable Foresight.
speaker-1: Well most organizations talk about net zero, but for many the majority of their carbon footprint sits outside their direct operations in their supply chain. That's scope three emissions. Harder to measure, harder to influence, and increasingly critical to business performance. Welcome to Nexus Podcasts. I'm Ben Hall, Global Thought Leadership Manager at GHD. Today I'm joined by Greg Carly, head of sustainability for the Americas at GHD. to explore how leaders can move from scope three reporting to real scope three emissions reduction and turn this complexity into a competitive advantage. Well why now, Greg? Why have scope three emissions shifted from a sustainability issue to a board level strategic priority?
speaker-0: Thanks, Ben. It's great to be here today on an exciting topic. ⁓ it it's really about looking at greenhouse gas data in general and scope three data and specifically as much more than an environmental issue. There's a wealth of data, wealth of information, and it really helps to look at that information and data ⁓ in a deeper level as a metric and a a way to look at what is happening with your business performance. And when you start looking at it as a business performance issue. then the value you can extract out of that is incredible in terms of cost reduction or realizing revenues that you might not be aware of and really driving your business to a new level.
speaker-1: So for many organizations, scope three emissions re ⁓ represent the majority of their footprint. So when leaders confront that reality, what's the most common mistake they make?
speaker-0: Yeah, it is. I mean, it can be upwards of 70, 80, even 90% in some businesses that we see. I think the biggest thing is to focus on what matters and not try to do too much. You often see ⁓ because it is a complex space, there's a lot happening in your scope three emissions, there's 15 different categories, you can really spend a lot of time and try to boil the ocean, if you will. So ⁓ that's a mistake that can be made. And when you do that, you're not focusing on what's really material and what matters to your business. And focusing then on your scope three data, that's actually going to drive value and drive that performance that we talked about. So ⁓ it's really critical that you spend the time up front when you're doing that to to understand what is is really happening with your scope three data and then really using that data to leverage the opportunity on the back end to to really drive that business performance.
speaker-1: Yeah, it's it's an interesting point you made there about the seventy percent ⁓ data point. Do you find that when you speak to businesses and organizations, they're surprised at that number?
speaker-0: I think ⁓ they were originally, but now that we've had more conversations, they're they're understanding ⁓ the supply chain elements, right? How big a supply chain is and how impactful your supply chain can be to your business. ⁓ that's something that I think you know, most executive CEO type people understand. ⁓ they may not have thought about it before in those terms then, but ⁓ but when they start to think about it, there's a bit of an aha moment ⁓ that they have that really helps them. ⁓ say, ⁓ okay, I get it now and ⁓ and what can I do to make a difference here?
speaker-1: You mentioned there are fifteen scope three categories. Instead of trying to tackle everything, I mean you advocate in a recent series of articles on the Nexus about prioritizing high impact hotspots. What does this look like in practice?
speaker-0: So in practice, it really looks at, you know, using some estimation tools to understand what are the big impacts. What are the what of those 15 categories are really driving your supply chain and driving your agreement your scope three emissions? So, you know, use tools available. There's some really good estimating tools. They may or over underestimate, but at least they give you an order of magnitude of where to start. And then you can dive deep into that information. So you may see, ⁓ look, there's two of the 15 that are actually driving. our scope three missions, let's focus on those. Let's worry about getting better data in those spaces that's more meaningful and more impactful for the business, ⁓ rather than trying to get all 15. So it's really critical to do some level of a high level review and then, you know, drill down into what really matters and what's really impacting your supply chain.
speaker-1: Sounds like when you start to do this, it's a bit tricky and difficult at first, especially to quantify exactly what's needed. And then as you as you refine it and go along, it gets better and better and more accurate. Is that correct?
speaker-0: Absolutely, Ben. I think it's like anything, right? When you steer doing something for the first time, it can be complex and tricky. ⁓ but really by using that information year over year, starting to refine it, ⁓ you start to get you know, really good things happening. And this is where I think the role of reporting does play a strong element because it does force you to do the inventory and start to look at things, but the value isn't reporting. The value is really driving change. through ⁓ starting to reduce greenhouse gas emissions ⁓ through your supply chain or or or really look at how you can leverage your supply chain better.
speaker-1: Now there's clear difference between scope three reporting and actually reducing scope three emissions. How do organizations avoid becoming stuck in just sort of disclosure mode?
speaker-0: Yeah, I think I mean it's it's it's about taking that data and looking at what can be meaningfully done. You know, what can you do and from policy perspective, you know, travel is often a big employee travels and often a big scope three emission. ⁓ you know, what can you do to start changing policy and changing procedures and changing behavior ultimately is what happens and it's changing behavior ⁓ of your employee base so that they're interacting with the suppliers in the supply chain better. And then also, you know, impacting the the behavior of your supply chain. You know, working with them in collaboration to start to understand how you can reduce emissions. And typically then what we see is it's not re reducing emissions per se, but it's also reducing cost. So if the supplier can start to reduce cost of the product, that's something they can supply they can, you know, push back up to up to the ⁓ up to the the parent company, if you will.
speaker-1: You just mentioned something there about about ⁓ supplier collaboration. ⁓ that's actually really important, isn't it, too? Because if you treat I think in this art these articles you you said something about if you treat your suppliers as transition partners, you definitely get a better result long term, is that correct?
speaker-0: ⁓ absolutely, right? So when we start to think of our suppliers and vendors as partners in our product, right? Because when, you know, depending on what you're whatever you're building, whatever widget you're building, obviously the quality of that and the the the value of that and the brand that you bring to the table is a function of of your supply chain and your suppliers as well. So when you start to work in partnership with them rather than lean on them as a, you know, sort of that old school mentality of you know, beating the supplier into the ground or beat them, you know, ⁓ getting them into submission ⁓ by driving cost or driving things down, but rather engaging them, working with them, helping them do better as well, gives a better product, gives a better outcome for the supplier and gives a better outcome for the parent company.
speaker-1: I know it's a broad question, but how often, if you especially if you're working with a company who's new to all this, how often do you need to sort of be in contact with them to help them along the way? I mean, I know it it it it varies from company to company, but is it a regular thing? what would you recommend?
speaker-0: I think there's there's different different models, Ben, that you can use. ⁓ certainly when we're first working with a company, it can be quite intensive and working with them ⁓ week in, week out to help them understand their data, help them understand where they can improve. But at some point what we want to do is get the you know, get the training wheels off, if you will, ⁓ and get them moving forward themselves so that they can ⁓ be self sufficient. So, you know, sometimes we talk about ⁓ one of the goals here is to work ourselves out of jobs as consultants. ⁓ but ultimately then ⁓ it is about getting them self sufficient and doing this themselves, ⁓ so that they can move it forward. But it you know, initially would typically can be pretty ⁓ pretty intensive ⁓ interactions.
speaker-1: And you mentioned carbon ⁓ carbon data. And I I suppose that many organizations collect vast amounts of carbon data that don't really influence outcomes. How do you define what what good scope three data look like looks like? What is what is quality data?
speaker-0: Yeah. That's really really a tricky part. And that's where, you know, understanding your business, analyzing your business and looking at that data from a ⁓ you know, business ⁓ value perspective. So it starts with understanding what's material to the business. What are the drivers? What's pushing your performance? Where can you ⁓ le you know leverage change? So understanding those material aspects and then starting to collect the right information. right data to sort of drive that forward ⁓ and make that make that work. So it's really aligning what you're trying to do with the with the information you have and meeting that in the middle. ⁓ you do need to QAQC, you do need to check that information, ⁓ because it's, you know, garbage in, garbage out, right? So it's really important to be able to to be able to rely on that information. So verification, validation, ⁓ and understanding that you have good quality information, the same way you would do finance data. The same way you would do ⁓ data for your your your your safety or or ⁓ or you know, your your employee base. So it's really important to be able to get get that information right and then you can make good, solid business decisions on it.
speaker-1: So let's talk about commercial upsides ⁓ of all of this. For executives who sort of view this as compliance driven, something they have to do, tick boxes, et cetera. How do you sort of how can you t describe to us the clearest commercial upside from tackling scope three emissions?
speaker-0: Well, I think it's it's pretty clear, right? If you're, you know, if you look at that greenhouse gas data as a marker for overall business performance data, scope one, scope two, and scope three, then because it touches on so many aspects of an organization, right? It touches on operational efficiency, it touches on you know, different elements of how you're using energy, how you're using materials in your processes. If everybody down the chain in the supply chain is doing that, then everybody's gonna get more efficient, everyone's gonna save costs. And then ultimately it it trickles back up, right? So if your suppliers can do it cheaper, they're gonna be able to pass some of that savings along to you and up up and up the chain. And it it it compounds itself. So the the simplest one is is is cost effectiveness, right? And really redoing cost ⁓ is is a key one. I think the other part is we've touched on in the conversation, Ben, is the value you get out of a better engaged supplier base. And the quality ⁓ improves, ⁓ other aspects of performance improves. Which may not have as much of a direct, you know, cost benefit that you can always ⁓ quantify. But, you know, if the material is or the product they're providing is a higher quality, you're gonna have less defects in the end of the product or less less issues along there, which is gonna save you cost in your production as well.
speaker-1: Well let's ⁓ take a look ahead. ⁓ five to ten years from now, what will differentiate organizations that lead on scope three emissions from those that actually fall behind?
speaker-0: Yeah. I think it really comes down to looking at scope three emissions as a strategic business value. And when you're starting to look at as a a lever that you can use in your business to drive performance and set yourself apart from your competitors, that's where that's going to happen five to ten years down the road. And and those who who have the foresight to think of it in that way, ⁓ they're really gonna be able to have a strategic advantage, which is gonna be ⁓ make them more competitive, make them more resilient to change in the business. ⁓ and we haven't touched too much on the supply chain resilience today, Ben, but that's a whole other piece, right? Yeah. You know, we're seeing that happen right now, real time in the world. ⁓ having a resilient, strong supply chain also has huge benefits to yourself. ⁓ and that's really comes down to understanding your supply chain. And a great way to do that is, you know, using the lens of scope three emissions to really understand your supply chain.
speaker-1: That's a great place to finish. Greg Carly, thanks very much for your time there and for your insights. Well, if today's discussion makes anything clear, it's this. The organizations that treat scope three reporting as insight, not just compliance, will build more resilient, competitive supply chains. You can read the full two-part Nexus weekly column series with Greg Carly on Scope 3 emissions and reporting on the Nexus platform. And if you haven't already, subscribe via the Nexus homepage to receive our latest articles, podcasts and videos directly. Thanks for listening. We'll see you next time.
speaker-0: Brought to you by Nexus, published by GHD. Actionable Foresight.
