Tracking Supply Chain Emissions: A New Approach

Tackling Supply Chain Emissions: The Rise of Carbon Accounting Startups

In the evolving landscape of climate action, the need for precise emissions tracking has gained urgency. While numerous carbon accounting and emissions management platforms have emerged, many startups initially focused on the more straightforward task of measuring direct greenhouse gas emissions—those categorized as Scope 1 and Scope 2. These emissions stem from energy consumption and direct operations of a company. However, as awareness grows around the complexities of environmental impact, attention is increasingly shifting towards Scope 3 emissions, which are often hidden within intricate supply chains.

Understanding Scope Emissions

To fully grasp the significance of emissions tracking in corporate sustainability, it’s essential to understand the different scopes defined in greenhouse gas accounting:

• Scope 1: Direct emissions from owned or controlled sources.
• Scope 2: Indirect emissions from the generation of purchased energy.
• Scope 3: All other indirect emissions that occur in a company’s value chain, including both upstream and downstream activities.

Interestingly, while Scope 1 and Scope 2 emissions are relatively easier to manage, they only account for approximately 20% of total global emissions. The remaining bulk—Scope 3 emissions—represents a daunting challenge for companies aiming to reduce their carbon footprint.

The Challenge of Supply Chain Emissions

The complexity of Scope 3 emissions lies in their invisibility and the diverse factors influencing them. For instance, a food company may not have direct control over the agricultural practices of its suppliers, yet those practices contribute significantly to the company’s overall emissions. As this realization takes hold, startups are beginning to focus on the intricacies of supply chain emissions management.

Innovations in Emissions Tracking

Recent innovations in the field are exemplified by companies like Clearly and Root. Clearly has recently secured a substantial seed funding round to address emissions linked to transportation within supply chains. Meanwhile, Root is pioneering efforts to help food and beverage companies collect primary data on their agricultural supply chains.

Root’s Approach

Root’s platform, launched in October 2022, allows companies to gather verifiable data directly from farmers through straightforward questionnaires. This data collection not only empowers companies to understand their supply chain emissions better but also enables them to model the environmental footprint of their products. For those interested in a deeper dive into carbon accounting, resources like The Handbook of Carbon Accounting provide comprehensive insights into methodologies for emissions tracking.

Key features of Root’s platform include:

• Data Collection: Simple questionnaires for farmers to provide essential emissions-related data.
• Customization: Each supplier receives a tailored score that reflects their specific practices, enabling more accurate emissions calculations.
• Integration: The platform can connect with existing farm management systems to streamline data retrieval.

The Importance of Granularity

Eric Oancea, one of Root’s co-founders, emphasizes the need for a granular approach to emissions tracking. He argues that relying on generic software solutions or industry benchmarks can lead to misleading estimations. For example, the carbon footprint of dairy products can vary widely based on factors such as feed type and livestock management practices. For further reading on the nuances of carbon management, consider exploring The Handbook of Carbon Management: A Step-by-Step Guide to High-Impact Climate Solutions for Every Manager in Every Function.

The Path Forward

Oancea advocates for a paradigm shift in the food industry, urging companies to move towards systems that prioritize data collection from suppliers. By understanding the specific practices of each supplier, companies can make informed decisions to reduce their carbon emissions. The importance of accountability in sustainability is further discussed in works like Sustainability Accounting and Accountability.

Root aims to expand its reach, currently focusing on the German-speaking DACH region and select Eastern European countries. As the platform grows, it will play a crucial role in transforming how supply chain emissions are understood and managed across Europe.

The intersection of technology and sustainability presents a promising frontier. Startups like Root are not only addressing the pressing challenge of Scope 3 emissions but also paving the way for more sustainable practices within agriculture and food production. As the industry embraces more data-driven approaches, there lies an opportunity for tangible progress in the fight against climate change.

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