Net zero momentum is building, with organizations committing to cutting carbon emissions to as close to zero as possible. Accenture reports that more than a third of the world’s largest organizations have a public net zero target – a 7% increase since the end of 2021. Organizations committed to net zero are generally proactive in their approach to decarbonization, setting near-term targets in addition to the longer-term ones. They are developing actionable strategies, including a transition to clean power. The proliferation of net zero ambitions is behind an increasing focus on value chain emissions reductions, known as Scope 3 under GHG Protocol.
For many industries, the largest sources of emissions lie upstream or downstream of core operations – about 75%, according to the 2022 report released by CDP. It is not surprising, then, that more organizations see Scope 3 targets as instrumental for reducing emissions at the necessary pace and scale. And while supply chain emissions are challenging to address because they are driven by activities beyond an organization’s direct control, there is a lot of interest in working with suppliers to tackle Scope 3 emissions. Organizations can collaborate with their suppliers to share best practices, change procurement standards, or collectively procure renewable energy.
A recent move by McDonald’s and their logistics partners is a unique example of such collaboration. The restaurant chain and the five members of their North American Logistics Council signed VPPAs for 189 MW from Enel North America’s Blue Jay Solar project, expected to cover 100% of the company’s U.S. supply chain’s electricity load with renewables. Large organizations often advise their suppliers on their carbon emissions reductions. However, McDonald’s went beyond best practice sharing and became the anchor buyer alongside their suppliers. This renewable energy aggregation represents how a joint effort is key to meeting decarbonization targets.
Organizations are looking beyond decarbonization to ensure that they invest in sustainable energy sources
Mounting stakeholder scrutiny has prompted organizations to take a deeper look at their practices and procurement functions to make them more sustainable. Corporate energy buyers are increasingly realizing that renewable energy projects can have positive non-financial impacts in the communities where they operate. As a result, they are looking beyond transactional elements, such as the quantity and cost of renewables. They want to see that the clean energy projects they select can solve a wide range of issues beyond generating clean electricity, reducing costs, and lowering carbon emissions.