Sustainable Value Chain

From insights to action, the path to extraordinary value starts here.
Thought you knew
the Scope 3 issues
in your supply
chain? Think
again.
Gaining visibility to hidden
hot spots to move from
targets to actions to value

Thought you knew the Scope 3 issues in your supply chain? Think again. Copyright © 2022 Accenture. All rights reserved. 2
Reducing all-tier Scope 3 emissions is a top
priority for companies committed to the
decarbonization of their extended supply
networks. But it’s not just about carbon.
Eliminating Scope 3 emissions
can bring value beyond emissions.
Companies are linking sustainability outcomes to their
enterprise value creation agenda, including:
• accessing premium customer segments
• expanding market access
• improving talent retention and attraction
• lowering the cost of capital
• mitigating regulatory disruption
• improving resilience
• mitigating risk

Thought you knew the Scope 3 issues in your supply chain? Think again.
Generating these benefits starts with gaining real visibility into Scope 3
emissions. Companies need to truly understand emissions across every tier
of their supplier base to:
Identify the main
drivers of upstream
emissions
Copyright © 2022 Accenture. All rights reserved. 3
Determine what’s
strategically important
to the supply chain
Decide where to
focus their efforts
Based on our research and Accenture-developed Scope 3 data model,
we’ve identified the insights and actions that will help companies
accelerate the decarbonization of their supply chains.

Insight #1
Nearly two-thirds of upstream emissions lay beyond Tier 1
suppliers, and in geographically complex networks
Across all industries, Tier 1 suppliers are responsible only for an average of 36% of total
upstream emissions.
Understanding multi-tier emissions—going
beyond Tier 1—is the only way to make
progress on reducing Scope 3 emissions, in
every industry.
In most cases, if upstream emissions are a significant portion of a company’s total emissions,
they tend to occur deeper in the supplier network.
Sectors vary significantly in network and geographic complexity.
Insight #1 | Insight #2 | Insight #3

Distribution of
upstream
emissions by
supplier tier
Source: Accenture Research analysis based on EXIOBASE 3 dataset, 2022

Insight #2
For nearly 50% of industries, real upstream
hot spots differ from those represented by
Tier 1 suppliers
The largest sources of emissions (“hot spots”) vary across industries,
and so do the targeted actions needed to address them.
Without visibility into multi-tier emissions, companies
may end up focusing and spending resources on actions
that ultimately may not have a significant impact on
reducing overall Scope 3 emissions.

Upstream Scope 3 hot spots by supplier tier
Excluding purchased power generation (i.e., Scope 2)
Note: Highlighted in green are the industries where their hot spot beyond Tier 1 emissions is different from the Tier 1 emissions hot spot.

Insight #3
Geographical footprint of your supply chain
matters, as it significantly influences your actual
upstream emissions
Dependency on local versus global suppliers varies by country, even in the
same industry. There’s considerable difference in the geographic source of
upstream emissions within an industry as well.
Multi-tier visibility allows better understanding of
the source of emissions and more accurate
targeting of emission reduction efforts for
each case.

Geographic source
of upstream
emissions
by country

Start moving faster

These three insights show
how transparency and data
on upstream Scope 3 can
help companies make
their emissions actionable,
auditable and reportable.
But companies need more than just
visibility. To accelerate their progress
in addressing Scope 3 emissions and
generating greater enterprise value,
they also need to act.
With multi-tier visibility, companies can:
 Identify where they can reduce potential
cost, regulatory, reputation, and other risks
and pressures, across both supplier tiers
and geographies
 Make better, more informed purchasing,
design, manufacturing, planning, after-
sales services, product end-of-life and
other decisions that reduce end-to-end
supply chain emissions
 Focus the efforts of limited resources on
the areas where action can have the
biggest impact

Five key actions

Based on the insights from our research, we’ve identified five key actions
companies need to focus on now to begin making an impact:
01
Conduct a real
multi-tier
hot spot analysis to
set targets and
drive the right
actions.
02
Embed
sustainability into
category planning
and supplier
selection.
03
Integrate emissions
into
the supply chain
control tower
and implement
a digital twin.
04
Support suppliers
in their ongoing
decarbonization
efforts.
05
Collaborate across
your sector, with
peers, suppliers
and ecosystem
partners to speed up
decarbonization
at scale.

Action 1
Conduct a real multi-tier emissions
hot spot analysis to set targets and
drive the right actions
Upstream emissions aren’t created equal and
large sources exist hidden from normal view.
To focus on what’s most important, companies
should conduct a detailed analysis of their
supplier base to determine the biggest sources of
emissions and use it as the foundation for an
action plan to address the areas of most
significant impact.
Action 1 | Action 2 | Action 3 | Action 4 | Action 5

Action 2
Embed sustainability into category
planning and supplier selection
With hot spots identified, a company can integrate
activities to reduce emissions into spend category
playbooks.
Include environmental, social and governance (ESG)
criteria in every step of the sourcing and decision-
making process, and customize category plans,
including emission-reduction strategies, to address
hot spots as appropriate.

Action 3
Integrate emissions into the supply chain
control tower and implement a
digital twin
Control towers can help companies reduce Scope 3
emissions by centralizing visibility and decision
making and guiding actions with short- and long-
term benefits.
A powerful complement to a control tower
is a digital twin of the supply chain that generates
the end-to-end visibility necessary to optimize
supply chain networks and simulate the carbon
footprint of the entire network.

Action 4
Support suppliers in their ongoing
decarbonization efforts
Proactively work with suppliers on an ongoing basis
to help them improve their own decarbonization
performance.
A segmented supplier engagement program with
training, incentives, and improved supplier data
quality and accuracy, is critical to this effort.

Action 5
Collaborate across your sector, with peers,
suppliers and ecosystem partners to speed
up decarbonization at scale
Use an intelligent operating model to aggregate
data from multiple parties and make
recommendations on the most effective steps
towards decarbonization.
These platforms require suppliers to commit to
ongoing engagement and provide a more complete
view of Scope 3 emissions so they can invest for the
greatest impact.

It’s time to make meaningful progress
on Scope 3
The scale of the challenge in reducing Scope 3 emissions is massive. The supply chain has a
responsibility to take a leading role and expand the types of value it delivers to the business.
The first step for companies is to gain deep visibility. By combining such visibility with
collaborative actions focused on the biggest upstream emissions hot spots, companies can fulfill
their aggressive decarbonization commitments while significantly increasing the overall enterprise
value supply chains create.

accenture.com/DecarbonizeSupplyChain

Sustainable Value Chain

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