Tackling Scope 3 emissions: challenges and strategies for OEMs

In the quest to mitigate climate change, businesses across all sectors are grappling with the challenge of reducing their greenhouse gas (GHG) emissions. In recent blog posts, we’ve explored the different types of emissions and focused on how to reduce Scope 1 and 2 emissions. But for Original Electronics Manufacturers (OEMs), a significant portion of emissions fall under the category of Scope 3 emissions.

Scope 3 emissions are indirect emissions in a company’s value chain, including both upstream and downstream activities. Managing and reducing these emissions is crucial for environmental sustainability and the long-term viability and reputation of OEMs. But it’s not easy.

Scope 3 emissions in the electronics manufacturing industry

For an OEM, Scope 3 emissions can be quite diverse and substantial. Here are some common examples.

Upstream Scope 3 emissions

• Purchased goods and services - Emissions from the extraction, production and transformation of raw materials and components purchased for manufacturing products, such as metals and plastics.
• Capital goods - Emissions from the production and transportation of machinery and infrastructure used in the manufacturing process.
• Energy-related activities - Emissions from the extraction, production, and transportation of fuels or energy that is purchased by an OEM but not combusted, such as electricity or heat.
• Transportation and distribution - Emissions from the transportation and distribution of components and finished products in vehicles or facilities not owned or controlled by the OEM.
• Waste generated in operations - Emissions from the disposal and treatment of waste generated in the manufacturing process, such as electronic waste or chemical waste.
• Business travel - Emissions from employees' business travel, such as flights or car travel.
• Employee commuting - Emissions from employees commuting to and from work.

Downstream Scope 3 emissions

• Use of sold products - Emissions from the use of the OEM's products by end-users. This includes the energy used to power electronic devices.
• End-of-life treatment of sold products - Emissions from the disposal and treatment of products at the end of their life, such as electronic waste recycling or landfilling.
• Transportation and distribution - Emissions from the transportation and distribution of sold products to retailers or end-users in vehicles or facilities not owned or controlled by the OEM.

These examples illustrate the wide range of activities that can contribute to an OEM's Scope 3 emissions. Now let’s take a closer look at the challenges involved in managing them.

Challenge 1: Scope 3 emissions are hard to measure

Measuring Scope 3 emissions is a complex task that presents several challenges for OEMs.

The first issue lies in the complexity and geographical spread of supply chains in the electronics industry. OEMs often source materials and components from a multitude of suppliers located all over the world. Each of these suppliers has their own suppliers, and so on, leading to a multi-tiered supply chain. Tracking the emissions from each of these entities requires a deep understanding of each supplier’s operations and the ability to collect relevant data. That’s a daunting task, given the vast number of suppliers and the geographical distances involved.

Another significant challenge is the lack of transparency and data availability from suppliers. Not all have the necessary systems in place to measure their own emissions. And even when they do, they may not be willing to share this data due to confidentiality concerns or lack of resources. This makes it near impossible for OEMs to accurately calculate their Scope 3 emissions.

The third challenge is the variability in emissions calculation methodologies. There are several different methods and standards for calculating GHG emissions, each with its own set of assumptions and calculation methods. This can result in inconsistent and non-comparable data. What’s more, certain types of Scope 3 emissions, such as those from the use of sold products, can be difficult to estimate due to factors such as the diversity of product uses, the variability in product lifetimes, and the lack of data on product disposal practices.

Finally, regulatory requirements differ across countries, which can create additional complexities for OEMs operating in multiple jurisdictions. 

Challenge 2: Scope 3 emissions are even harder to reduce

Getting a handle on the Scope 3 emissions your company produces is one challenge. Reducing them is a whole other ball game.

One of the biggest challenges in reducing Scope 3 emissions is OEMs' limited control over their suppliers’ practices. While you can encourage suppliers to adopt sustainable practices, you don’t have the authority to enforce them. This is particularly challenging if you’re dealing with suppliers in different countries, where environmental regulations and standards can vary.

Technological constraints also pose a significant challenge. While advancements in technology have the potential to reduce emissions, they often come with their own set of challenges. For example, transitioning to more energy-efficient manufacturing processes or equipment may require overcoming technical hurdles and could impact the final product's quality or performance. 

Economic factors and trade-offs must also be considered. Emissions reduction initiatives often require significant upfront investments in new technologies, equipment, or process changes. While these can lead to long-term cost savings and benefits, they can be a barrier for companies facing budget constraints or short-term financial pressures.

Lastly, the lack of incentives and regulatory support can hinder efforts to reduce Scope 3 emissions. In many parts of the world, the UK included, regulations focus on Scope 1 and 2 emissions and do not provide sufficient incentives for companies to tackle Scope 3 emissions. Without regulatory pressure or incentives, it’s easy to put off investing in the necessary measures to reduce these emissions.

Strategies to overcome these challenges

Despite these challenges, measuring and reducing Scope 3 emissions is a crucial part of any comprehensive sustainability strategy. 

So what’s the solution?

There are, in fact, several strategies that OEMs can employ to tackle these issues.

Implementing robust supply chain management practices

This involves deploying systems and processes to monitor and manage the environmental performance of suppliers. For instance, OEMs can establish supplier codes of conduct that include environmental standards and require suppliers to report on their emissions. They can also use supply chain management software to track and analyse emissions data across their supply chains. These strategies can significantly improve transparency and data collection, making it easier to measure and manage Scope 3 emissions.

Collaborating with suppliers

Working with suppliers to identify opportunities for emissions reductions, sharing best practices, and providing training and resources to help suppliers improve their environmental performance are just some of the ways OEMs can collaborate with suppliers. These practices offer mutual benefits, as they can help suppliers reduce their costs and risks while also enabling OEMs to reduce their Scope 3 emissions.

Investing in R&D

Through research and development, OEMs can develop cleaner technologies and more efficient manufacturing processes that reduce emissions across their supply chains. This could involve investing in areas such as renewable energy, energy-efficient equipment, and materials with lower carbon footprints. While these investments may require significant resources, they can also lead to long-term cost savings and competitive advantages. 

Advocacy for industry-wide standards and regulations

By advocating for stronger environmental regulations and standards, OEMs can help level the playing field and drive collective action towards emissions reduction. This can involve engaging with industry associations, policymakers, and other stakeholders to promote the adoption of stricter emissions standards and the development of incentives for emissions reduction.

Conclusion

While the task of measuring and reducing Scope 3 emissions is complex and challenging, it’s not insurmountable. By employing these strategies, OEMs can overcome the challenges associated with measuring and reducing Scope 3 emissions and make significant progress towards their sustainability goals. The journey towards a low-carbon future is a challenging one, but with strategic planning and action, OEMs can turn these challenges into opportunities for innovation and growth.

This blog post is the third in a series of posts exploring emissions reductions strategies. Check out our earlier blog posts here:

For more information on Tackling Scope 3 emissions: challenges and strategies for OEMs talk to ESCATEC Mechatronics Ltd