By Tetyana Mozhayeva, Senior Director of Sustainability at euNetworks | 21 FEBRUARY 2024
As the Sustainability leader at euNetworks, I often find myself explaining the intricacies of carbon accounting and its impact on business operations to our customers, suppliers and partners. Certainly and unsurprisingly, Scope 3 emissions is the topic that dominates the conversations. It’s the one that every business must collaborate across their supply chain to both measure and collectively reduce. ESG accountability is a must for organisations, with that demand coming from legislators, customers, shareholders and partners.
Just looking at legislation, in January 2023 the Corporate Sustainability Reporting Directive (CSRD) came into force, replacing the Non-Financial Reporting Directive (NFRD)[1]. It makes nearly 50,000 European companies responsible for collecting and sharing their sustainability information – up from the 11,700 covered by the NFRD. The first companies will have to apply the new rules for the first time in the 2024 financial year.
Understandably these factors are making carbon measurement a big focus for businesses, but while Scope 1 and 2 emissions are mostly within their management and control, it’s Scope 3 that is causing the most difficulty.
For many businesses Scope 3 is where the real impact is and where the real difficulty lies. According to a recent report[2] by the Carbon Disclosure Project and Capgemini 92% of emissions disclosed by European companies in 2022 were Scope 3.
According to the leading GHG Protocol corporate standard[3], a company’s greenhouse gas emissions are classified into three scopes: Scope 1, Scope 2, and Scope 3. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 addresses indirect emissions from the generation of purchased electricity, steam, heating, and cooling. However, it’s Scope 3 that often captures the spotlight for its complexity and scale, encompassing all other indirect emissions that occur in a company’s value chain. From the procurement of raw materials to the end-of-life treatment of sold products, Scope 3 emissions are both pervasive and elusive, making them a critical focus for any organisation committed to reducing its carbon footprint.
Why is Scope 3 measurement so daunting? Firstly, the sheer breadth of activities across a company’s value chain introduces significant complexity. Tracking emissions from upstream activities like purchased goods & services and capital goods to downstream processes such as use of sold products requires access to data often beyond a company’s direct control. Even though emissions along the supply chain represent the biggest GHG impact, the variability in supply chain practices and the lack of standardised reporting mechanisms pose a substantial challenge, making accurate measurement a meticulous and often intricate task.
Our own sustainability journey has been a series of trials and learnings, guided by a unified vision and passion for positive impact throughout the company. As a result, we have developed the tools, capabilities and experience to help our customers meet their ESG goals and sustainability commitments.
We set ambitious targets without a complete understanding of how to achieve them, not due to lack of effort but because the necessary technologies aren’t available yet. We set 1.5°C-aligned science-based targets across our Scopes 1, 2, and 3, joined the Climate Pledge and therefore committed to be net zero carbon emissions by 2040, committed to and achieved over 99% utilisation of renewable energy, and also secured sustainability linked financing, which embeds our commitment to sustainability into our financial framework.
We have pioneered the development of network carbon emissions tools, allowing us to identify and manage our own carbon hotspots, while also empowering our customers to measure and address their Scope 3 emissions with precision. In simple terms, we offer service-based emissions that empower our customers to manage, forecast and ultimately reduce their carbon footprint.The infrastructure we build and the solutions we design are focused on sustainability. Our Super Highways are innovative fibre builds with increased capacity and lower power consumption, achieving the lowest ‘carbon per bit’ possible. We work with our suppliers to explore alternative materials and products that contribute to a lower carbon footprint.
We’re not just building a sustainable network. Perhaps the most exciting aspect of our journey towards sustainability is the community we’re building along the way. We’re focused on cultivating a network of organisations committed to sharing best practices, lessons learned, and collaborative efforts in meeting ESG targets and decarbonisation initiatives. This community ethos is rooted in the belief that collective action is paramount to achieving meaningful and lasting environmental impact.
Through forums, workshops, and joint projects, we’re facilitating the exchange of knowledge and fostering partnerships that amplify our collective ability to address Scope 3 emissions and beyond. It’s a testament to the power of collaboration in driving forward the sustainability agenda and delivering meaningful and real progress.
Measuring and lowering Scope 3 emissions is a big challenge and I think our CEO Paula Cogan put it really well when she was at COP28 in December 2023. She said “It’s clear that while we have made great progress towards sustainability goals, we are still at the beginning of our journey. In an industry fundamental to economies and society, collaboration among suppliers, customers, partners and the broader ecosystem will be essential to achieving substantial, long-term environmental change.”
I can tell you from experience that addressing Scope 3 emissions demands data collection and collaboration across the value chain, from production to end use. The process is complicated by the need to engage multiple layers of suppliers to adopt sustainable practices and report emissions, increasing the complexity of tracking and reducing emissions.
But, despite the challenge, there is also a big opportunity for digital infrastructure to make a positive, long-term impact on carbon emissions. As carbon measurement tools like ours mature and develop further, and partnerships between businesses improve with collaboration and shared learning, we will all become more able to make informed emissions-based decisions on how we manage and build this necessary critical infrastructure.
If ESG and sustainability are a focus for your business, or if you have questions about how to measure the carbon emissions of your digital infrastructure, then reach out to me and I would be happy to share advice and best practice.
Tetyana Mozhayeva, Senior Director of Sustainability at euNetworks
Find Tetyana on LinkedIn
Sources
[1] Source: European Commission website: Corporate sustainability reporting
[2] Source: CDP & Capgemini Invent report | July 2023, ‘From stroll to sprint – A race against time for corporate decarbonization’
[3] Source: GHG Protocol website: GHG Protocol Corporate Accounting and Reporting Standard
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