• Linda Ellett, Partner |
6 min read

Though only large UK companies are required to report on their energy usage and carbon emissions, the effects trickle right down the value chain. A staggering 80% of a business’s emissions are produced indirectly by suppliers yet contribute to their overall carbon footprint. If big businesses are to realise their net-zero ambitions, then supply chain decarbonisation is critical.

The sustainability strategy for FTSE-250 company Britvic plc is ‘Healthier People, Healthier Planet’. It underlines the company’s commitment to making the world a better place. Britvic plc was the first soft drinks company in the UK to commit to the 1.5 degree pathway and has an ambitious target to reduce its Scope 1 and 2 emissions by 50% and Scope 3 carbon emissions by 35% by 2025. It identifies its material issues as healthier consumer choices, responsible packaging, decarbonisation, water stewardship and biodiversity. Sarah Webster, director of sustainable business at Britvic plc says: “If we don’t have water, there are no soft drinks. If there are no bees, there is no Robinsons fruit squash.”

What are Scope 3 emissions?

The Greenhouse Gas (GHG) Protocol requires companies to understand, measure and report on emissions and to focus their efforts on the greatest reduction opportunities.

Scope 1 and 2 emissions are owned or controlled directly by the company itself.

Scope 3 emissions are hardest to identify as they are produced indirectly by suppliers and businesses up and down the value chain.

“If we don’t have water, there are no soft drinks. If there are no bees, there is no Robinsons fruit squash.”
Sarah Webster, director of sustainable business
Britvic plc

Sarah joined Lina Hilwani, director within KPMG’s Sustainable Supply Chain team, in a refreshingly frank exchange on how businesses and suppliers can grapple with Scope 3 emissions.

Get suppliers on board

To engage with the supply chain and support their efforts to reduce emissions, Lina believes it starts with addressing the “what, how and why” of decarbonisation.

  • Be clear about what you are asking suppliers to do – perhaps a change in raw materials or an alternative delivery route – and include specific steps to improvement.
  • Invest time in thinking about how your suppliers will deliver the changes you want. It might involve co-investment in new technology, or simply giving them more knowledge that will result in better data and, therefore, better traceability and reporting.
  • Help suppliers to understand why you’re doing it and what’s in it for them. Demonstrate how value from decarbonisation of the supply chain adds resilience to your relationship with your supplier and, in turn, to their relationships with other customers.

Key takeaway: Be clear about what you expect from your suppliers and how you can help. Prioritise and understand your hotspots. Communicate, engage and encourage collaboration.

Don’t be overwhelmed by the abundance of data

There is no escaping data in Scope 3. Yet non-financial data needs to be treated with the same rigour as financial data.

Data helps businesses to understand their hotspots, to size the opportunity and to break it down into its component parts. It helps with targeting investment, effort and resources where they are most needed. Data is the means to track progress against targets.

Britvic plc, in its initial assessments, identified that 80% of its material impacts are down to around 20% of its material suppliers. Taking an 80:20 approach to Scope 3 makes the exercise “more manageable and less overwhelming, than going for nth-degree accuracy” explains Sarah.

For Lina, it’s about “being brave enough to estimate without having to dissect forensically every number that underlies every assumption.”

“Be brave enough to estimate without having to dissect forensically every number that underlies every assumption.”
Lina Hilwani, director,
KPMG Sustainable Supply Chain

There is cross-over between financial and non-financial data, and Sarah admits that she is not averse to borrowing staff from the finance function to embed rigour and governance into sustainability practices. Britvic plc’s Finance Centre of Excellence already handles reporting on calories and they are looking at other non financial metrics for them to manage.

Sarah urges companies and suppliers at different stages of Scope 3 maturity to learn from one another. “We need to present data in a consistent way so that all stakeholders, whether suppliers, customers, investors or debt holders, understand and can easily compare different businesses and operations.”

Key takeaway: Don’t be overwhelmed by the size of the task – 100% accuracy is not realistic. If you wait for perfect data before you move on, you will stand still.

Make sustainability everyone’s responsibility

Engagement on sustainability and decarbonisation competes with multiple other financial and commercial priorities. But it’s important to get everyone to understand what is possible.

A digital learning programme helps Britvic plc employees to understand the corporate sustainability strategy. The programme explores issues like carbon, water, diversity and inclusion, packaging, calories and supply chain, and is complemented with insights and best practices from around the business. “We don’t have all the answers, but people are doing really fabulous stuff that we share,” says Sarah. All staff are expected to complete the learning modules. “It’s not the responsibility of the handful of people who work in sustainability to deliver the strategy. It’s down to our 4,000 people around the world to do that.”

“It’s not the responsibility of the handful of people who work in sustainability to deliver the strategy. It’s down to our 4,000 people around the world to do that.”
Sarah Webster, director of sustainable business
Britvic plc

Equally important is bringing the outside in. Britvic plc looks at its peers to find out what they are doing on packaging and other initiatives. Sarah terms it “stealing with pride”. It looks to other industries and markets to discover how they tackle decarbonisation. And it learns; it applies, and it shares.

Investors, too, are increasingly interested in sustainability performance. So is the future talent pipeline. Everyone speaks the language of sustainability these days and wants assurances that companies, like Britvic plc, are committed to a greener, zero-carbon future.

Key takeaway: Everyone is responsible for enforcing the sustainability strategy, not just its architects. Learning and improvement opportunities comes from both inside and outside the organisation.

Avoid carbon-tunnel vision

It is impossible to look at Scope 3 decarbonisation initiatives in isolation from ESG or other metrics. Everything is interconnected. Focus too much on carbon reduction and you’ll overlook your impact on water usage. Unintended consequences arise when the balance falls too heavily in one direction.

Top tips for supply chain decarbonisation

  1. It's never too early to start. Don't wait until you've got a perfect plan because things change quickly, and it will become redundant.
  2. Avoid looking at your entire supply chain at once. Narrow it down and prioritise.
  3. Steal with pride. Look at what other people are doing; learn from what they do well and from their mistakes.
  4. Share the vision and value of Scope 3 emission reductions inside and outside your business. Find your allies and collaborate

Every action has the potential to save not just costs, but to reduce energy or water consumption, or something else. And that translates into even greater cost savings. Putting that sort of lens on activity can encourage innovation among suppliers to deliver better products with fewer ingredients. It can inspire employees to be creative and captures the imagination of consumers. And it can make your business the type of business where people want to work and grow.

Key takeaway: Sustainability is not just about admin, time and costs. It is an opportunity for innovation and growth, commercially and personally, for a healthier planet.