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Decarbonisation – A Deep Dive into Scope 3, Category 1 (Purchased Goods and Services)

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Blog summary

  • Category 1 includes all upstream emissions associated with the entire life cycle of products, such as extraction, manufacturing, transportation and disposal.
  • Three simple steps to managing and reducing category 1 emissions include: (1) Assessing your value chain; (2) Engaging your suppliers and (3) Monitoring and reporting your data transparently.

Refresher on Category 1

Category 1 focuses on all upstream (i.e., cradle-to-gate) emissions associated to the entire life cycle of products purchased by the reporting company, including both goods (tangible products) and services (intangible products).

These emissions often make up a significant proportion of an organisations footprint – particularly those in sectors such as Retail, Manufacturing, Construction and Agriculture.

3 Steps to Manage your Category 1 Emissions

  1. Assess the Entire Value Chain: Mapping and understanding your organisations value chain is paramount for identifying emissions hotspots and facilitating sustainable changes. You can undertake an assessment of your value chain by analysing and scrutinising procurement processes, supplier relationships, and product life cycles. This provides invaluable intelligence on where to focus your efforts to realise your net-zero targets.
  2. Engage your Suppliers: Supplier collaboration is key for emissions reductions. Initiating a dialogue with your suppliers regarding ESG is critical to both managing and reducing your emissions. Mapping your top suppliers (based on either material criticality or spend) is the first step for engagement. Following this, encourage your suppliers to take ESG conscious steps in their own organisation and establish a collaborative approach to emissions reductions.
  3. Monitor and Report Transparently: To drive meaningful change, establishing a robust governance structure to support the continuous monitoring and reporting of your emissions is crucial. This will encourage transparency and facilitate making real changes to reduce emissions due to your improved ability to analyse the data.

The Reality of (Dis)engagement: 

Effectively engaging your stakeholders, both internal and external, plays a huge part in your organisations net-zero journey. Naturally, collaborating with those external to your business (such as suppliers) presents its own unique challenges. It is imperative to be mindful of this and map out appropriate methods to take to overcome these challenges. By establishing a clear line of communication through regular calls or video conferencing with your key suppliers, you can gain valuable insight into their organisations needs and perspectives and strengthen the working relationship. Ultimately, this allows you to map out a decarbonisation strategy that suits both parties to ensure progress can be made. 

To further your understanding, follow our series of scope 3 category deep-dives, where we unpack each of the 15 categories and the necessary business actions for each, which will be posted on our blog monthly.