How to Reduce Upstream Emissions With the Gold Standard Framework for Supplier Engagement

What are upstream emissions?

Upstream emissions are the scope 3 emissions that are generated from cradle to gate. They are associated with processing, production, storage and distribution of fossil fuels. Upstream emissions represent around 4x of operations and therefore, reducing them mitigates climate change.

To effectively reduce upstream emissions businesses must actively engage with suppliers and vendors across the whole supply chain. That can be challenging as there can be thousands of suppliers, unavailable data, or gaps in the data, limited resources to collect and organize, or inefficiencies in communicating with other parties involved. 

The Gold Standard has developed an effective framework for supplier engagement that empowers businesses to reduce upstream emissions and meet their targets. 

In this article, we will explain the framework in detail and show how Net0 empowers businesses to measure and reduce upstream emissions. 

The Gold Standard Framework for Supplier Engagement

The framework for supplier engagement consists of two stages: 

1. Stage 1 focuses on developing a supply chain engagement strategy 
2. Stage 2 focuses on implementing the supply chain engagement strategy

Stage 1: Develop a supply chain engagement strategy 

Step 1: Identify (suppliers to engage) 

To develop a sustainable strategy, the company must first (1) identify the suppliers to engage with and then (2) formulate the strategy. 

The most effective strategy proves to be starting with the highest emitting suppliers and once those are identified, moving on to the rest. 

How can Net0 help to identify suppliers? 

• Organize all of your suppliers in one place:
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  Net0 emissions management platform allows businesses to list all suppliers in one place. Listing and organizing all suppliers in one platform is especially beneficial for big companies with thousands of suppliers.

• View emissions contribution by every supplier:
  
  Net0 enables companies to view emissions profiles of each vendor to identify the suppliers with the highest emissions. It’s quick and simple to use and the data can be visible to team members that you give access to.

• Automate emissions data collection from suppliers:
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  Net0 enables companies to put carbon accounting on autopilot. Simply connect Net0's system to invoices from suppliers or via API integrations, and data from each of the suppliers will automatically flow in your Net0 platform. 

Step 2: Formulate (the strategy)

Once all suppliers are identified and organized, the strategy of engagement should be formulated. 

The strategy should be actively promoted by the CEO, CPO and other responsible leadership teams across various departments of the company. 

How can Net0 help to formulate the strategy? 

• Get matched with sustainability experts and ESG consultants: 

Net0’s community of professional consultants (both agencies and individual experts) offers great help when it comes to formulating strategies. Depending on the industry, location and other requirements, Net0's team will help you find an expert to work with to consider available resources and constraints, and define a clear strategy with measurable and reliable goals. 

Related content:
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To learn about more strategies and approaches, take a look at these free resources about guides and regulations:
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• Article: GHG Reporting: Everything You Need to Know
• Article: Scope 3 Emissions: Contributing Factors, Measurement and Reduction
• Article: Scope 4 Avoided Emissions: What You Need to Know

Stage 2: Implement the supply chain engagement strategy

Step 3: Communicate 

Establishing a transparent and effective two-way communication with suppliers is a crucial step in the process. The company's goal will be to inform suppliers of desired actions and outcomes as well as collect the data to monitor progress and improve processes. 

Sometimes establishing such communication might not be as easy as suppliers might choose not to disclose the information. In fact, if two companies request a supplier to disclose to the CDP, there is a 68% probability that the supplier will respond. If three companies send a request, then there is a 76% likelihood they will respond, according to reporting statistics provided by the Gold Standard.

How can Net0 help to improve communication with suppliers? 

• Leave communication to professional consultants:
  
  Reaching out to suppliers might be costly and take a lot of time. Understanding how to define responsibilities can also be a challenge and may cause misinformation and data gaps amongst suppliers. Net0's consultant partners can help work with suppliers directly, establish communication channels, define responsibilities, and keep up communication in the future to ensure the emissions data provided is up to date and reliable.

• Use APIs to collect and organize the data:
  
  Make the most out of 350+ integrations available to collect the data from suppliers and track the progress on the Net0 platform’s dashboard. Collect data through API, machine-learning powered OCR, invoices, and more sources. 

Step 4: Collaborate 

Consistently collaborating with suppliers is important for achieving long-term goals. This determines the methods with which the suppliers will engage. These methods can fall under the following categories: 

• obligatory (e.g. standards)
• voluntary (e.g. promotion) 
• competitive (e.g. a rating/scoring system)

The cascade mechanism is effective for suppliers to engage with each other throughout various tiers of the supply chain to adopt emissions reduction targets.

How can Net0 help to collaborate with suppliers? 

• Connect your suppliers to Net0.

Net0's software solution aims to make carbon accounting and emissions management as seamless for all value chain participants as possible. Automating data collection through integrations with ERP systems and API access simplifies data collection on an ongoing basis and ensures accuracy. 

Step 5: Support 

Since there are many challenges along the way (such as emission data gaps, inability to organize  data, sparse and of poor quality data, and the high cost of acquiring the information), constant support is needed for smooth cooperation. 

How can Net0 help to support suppliers? 

• Utilize Net0's consultants for ongoing support.
  
  Whether the business prefers a one-off workshop to cover certain questions, or prefers to follow a more partnered approach when working with suppliers, Net0's community of partners is flexible with the requirements of the business. 

Step 6: Monitor

Monitoring your emissions actions is key when following a carbon reduction strategy to assess progress and make even more robust emissions targets every year.

How can Net0 help monitor the progress? 

• Internal dashboard: 

The Net0 platform records all emissions, categorizes and itemizes emissions by activities, vendors, or emission scopes, provides businesses with in-depth analyses, and empowers teams to track the progress of the way to net zero.

• Public access dashboard: 

Progress can also easily be communicated to the public, media, investors, and end consumers via the public dashboard that companies can give access to by sharing their customized link. Being transparent by communicating their efforts with others in the ecosystem with live data, increases trust, loyalty, and drives strong, reliable partnerships. 

Step 7: Reinforce

The last step of the process is the one that creates measurable and continuous impact across the value chain. 

At this stage of the process the company should actively and continuously employ reinforcement mechanisms, positive or negative, to incentivize action. 

How can Net0 help to take practical actions to reduce carbon emissions for good? 

• Use predictive technology and simulation tools:
  
  Net0's simulator tool enables businesses to accurately measure the impact of internal business process changes. The tool allows businesses to see the impact of their actions (e.g. what happens if the business changed the supplier or the supplier switches to renewable electricity), understand which actions accelerate the progress towards set targets, and see the trajectory of the carbon emissions profile.

• Set targets:
  
  Set measurable, achievable, timely targets on the yearly basis and share them with the rest of the company.

• Use benchmarks:
  
  Compare your business targets and processes to other players in your industry. See what other companies are committing to and which actions they are taking to get to their targets.

• Add actions to take directly to the platform:
  
  Create a to-do list for your team. An intuitive tool allows managers to organize action cards according to the completion stage and stay on top of the current progress.

• Appoint responsibilities to team members:
  
  Allocate actions and assign tasks to team members where they can contribute on personal dashboards. Track the progress of the team collectively on the company dashboard and see the contributions of every team member, all in one place.

• If necessary, find new or alternative vendors
  
  Sometimes to achieve targets, the business would need to consider switching to more sustainable vendors with a lower emissions profile. Green Vendor empowers businesses to find and switch to new suppliers.
  

Final thoughts

Involving vendors and other players in your supply chain to help reduce upstream emissions is a necessary practice to mitigate and significantly cut carbon emissions across the supply chain. The framework for supplier engagement developed by the Gold Standard is a helpful step-by-step guide on how to approach management of value chain CO2 emissions. While the framework is a great guide, practical tools are needed to accurately follow each of the steps outlined in the framework. Net0 carbon accounting software offers a practical solution for each of the stages of the process and transforms the way businesses connect with suppliers, collect data, and improves transparency with its precision. Data analytics available on the Net0 platform translates these into actionable insights, empowers team involvement, promotes transparency, and significantly improves the decision making process within the business as well as outside of internal business processes. 

For most companies, acting to reduce carbon emissions throughout the value chain is one of the most important and impactful steps that can be taken to fight climate change. Net0 makes the transition smooth and effective.

Go one step further and make the decision to book a free call today with an expert from Net0. Experience how the platform takes your upstream emissions data and converts it accurately to carbon tonnage, making it easy for you to measure, track, pinpoint and reduce emissions from various sources, offset, accurately report, and get carbon-neutral certified.

Cover photo by Chris LeBoutillier from Pexels