Supply Chain Sustainability Reporting Series by Emma Woodberry

Part 2 - Scope 3 visibility and measurement

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What is Scope 3 and why is it so complex to measure?

Scope 3 emissions are all emissions not accounted for in Scope 1 and 2 – that is, all emissions which are generated both upstream and downstream of your direct operations. It includes how your products are used once they are no longer in their control, through to their end-of-life treatment. For example, if you’re a t-shirt manufacturer, then the emissions generated when that t-shirt is either thrown away into landfill or recycled will count toward your scope 3 emissions. This is driving more organisations to think about how their product is used, and support and enable customers to engage in circularity to find a second life for their products. If we look upstream, the carbon footprint of our textile suppliers, as well as the transport into our operations is counted towards our Scope 3 too – driving the emphasis on visibility, transparency and supplier collaboration.

This is what makes Scope 3 complex, particularly when we’re looking at physical supply chains. A truly transparent supply chain will have traceability of all raw materials from harvest/extraction to processing and manufacturing, retail and consumption.

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How to increase/improve visibility

The complexity of Scope 3 emissions means it has yet to become an embedded focus and activity for most organisations – emerging regulatory requirements will push organisations to put the spotlight on their emissions, and understand where the greatest contributors are in their supply chain. 50% of you told us that Scope 3 emissions are not on your mind yet, but making up over 70% of all emissions, it’s becoming increasingly clear that we need to know how big our Scope 3 footprint is. Customers are starting to place greater importance on aligning themselves with brands who are sustainable and conscious, shifting the need for understanding your emissions from a regulatory and commercial driver to a brand loyalty and reputation driver.

When reporting on your footprint, The Greenhouse Gas Protocol is one of the most common frameworks guiding carbon emissions understanding, measurement and reporting. You can’t accurately report on your wholistic carbon footprint without knowing you Scope 3 emission, and to know these, you must know your supply chain. Without reporting on Scope 3, it’s likely that you're not seeing the whole picture, which can lead to reputational and commercial risks.

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How do I measure scope 3?

Measuring scope 3 starts with mapping your supply chain, including upstream suppliers and processes, through to consumer use and end of life. Boundary setting is an important feature in measuring Scope 3 emissions – it allows an organisation to determine how far their own measurement and disclosure of Scope 3 will reach. For example, a t-shirt manufacturer can decide it will include all entities within it’s operational control, to Tier 1 suppliers. From here, you can attribute emissions to the activities within the supply chain and develop an understanding of your Scope 3 emissions.

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Now what?

Measuring emissions is the first step to baselining your activity. It’s critical to set targets and develop an action plan in how you will work towards reduction. Once targets are in place, specific reduction activities can be implemented to support overall reduction. These activities and reduction efforts can be reported in an annual Sustainability Report.

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Where we can help

At Trace, we can support you in understanding where your Scope 3 emissions come from. Our carbon emissions measurement approach (link to first article) lays out the practical steps to measuring Scope 3 emissions. From here, it’s critical to identify initiatives and programs of work that will support your organisation in reaching targets.

Get in touch today to see how we can help your supply chain sustainability journey.

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Emma Woodberry

Senior Manager

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Decarbonisation in Fashion: Addressing Key Challenges with Strategic Actions

The fashion industry, known for its dynamic nature, faces significant challenges in its journey towards sustainability and decarbonisation. With increasing pressure from consumers, regulators, and stakeholders to reduce environmental impact, brands must navigate complex issues to make meaningful progress. Systematic improvements across the fashion value chain are essential for driving decarbonisation, but this requires addressing key challenges with targeted actions.

This article explores six critical sustainability challenges faced by the fashion industry and maps out corresponding actions that can help brands move towards decarbonisation. We will also discuss how Trace Consultants can support fashion companies in developing and implementing these strategies, ensuring that sustainability becomes an integral part of their business model.

Challenge 1: Brands Struggle to Make Sustainability a Core Priority

When economic conditions are challenging, sustainability often takes a backseat as brands focus on immediate financial concerns. However, neglecting sustainability can have long-term consequences, both environmentally and commercially.

Action: Create Commercial Value

Brands need to integrate sustainability into their core business strategy by demonstrating how it creates commercial value. This involves aligning sustainability initiatives with financial goals, such as cost savings from energy efficiency, or revenue growth from sustainable products. By making the business case for sustainability, brands can ensure that it remains a priority even in tough times.

How Trace Consultants Can Help:

Trace Consultants assists fashion brands in identifying and capitalising on the commercial value of sustainability. By developing business cases that align sustainability with financial performance, Trace Consultants helps companies maintain a focus on sustainability, ensuring it is seen as a value-adding component of the business.

Challenge 2: Changes Required Go to the Heart of Business

Sustainability efforts in the fashion industry often require fundamental changes to business operations, particularly in areas such as material sourcing and supply chain management. These changes can be difficult to implement, especially in large, complex organisations.

Action: Focus on Big 2: Material Transition and Tier-2 Supplier Energy Transition

To make meaningful progress, fashion brands should focus on two critical areas: transitioning to sustainable materials and driving energy transition among tier-2 suppliers. These actions address the most significant sources of environmental impact and help lay the foundation for broader sustainability efforts.

How Trace Consultants Can Help:

Trace Consultants provides expertise in managing material transitions and supplier energy transitions. By offering strategic guidance and support, Trace Consultants helps fashion brands implement these changes effectively, ensuring that sustainability efforts have a real impact on their environmental footprint.

Challenge 3: Charting a Decarbonisation Path is Complex

The path to decarbonisation in the fashion industry is fraught with complexity, from navigating regulatory requirements to managing supply chain emissions. Developing a clear and actionable roadmap is essential for success.

Action: Build a Carefully Prioritised, Robust Roadmap

Fashion brands need to develop a decarbonisation roadmap that is carefully prioritised and robust, outlining specific steps to reduce emissions across the value chain. This roadmap should be informed by data, stakeholder input, and a clear understanding of the company’s environmental impact.

How Trace Consultants Can Help:

Trace Consultants assists fashion brands in building comprehensive decarbonisation roadmaps. With expertise in sustainability strategy and implementation, Trace Consultants ensures that these roadmaps are actionable, prioritised, and aligned with the company’s overall goals.

Challenge 4: Fashion Industry Lacks Sufficient Supply Chain Transparency

Transparency is a significant challenge in the fashion industry, particularly within the supply chain. Without clear visibility into supply chain practices, it is difficult for brands to manage and improve their sustainability efforts.

Action: Get Granular on Data

To enhance supply chain transparency, fashion brands must get granular on data, collecting and analysing detailed information about supplier practices, materials, and environmental impact. This data-driven approach enables brands to identify areas for improvement and track progress over time.

How Trace Consultants Can Help:

Trace Consultants provides solutions for improving supply chain transparency through data collection and analysis. By helping brands gather and interpret detailed supply chain data, Trace Consultants ensures that companies can make informed decisions and drive sustainability improvements across their operations.

Challenge 5: Implementation is Consistently Underestimated

Many fashion brands underestimate the challenges involved in implementing sustainability initiatives. From aligning stakeholders to managing complex projects, the execution of sustainability strategies requires careful planning and management.

Action: Boost Execution and Transformation Management

Fashion brands must enhance their execution and transformation management capabilities to successfully implement sustainability initiatives. This includes setting clear goals, establishing strong governance structures, and ensuring that all stakeholders are aligned and committed to the process.

How Trace Consultants Can Help:

Trace Consultants supports fashion brands in boosting their execution and transformation management capabilities. With expertise in project management and change management, Trace Consultants helps companies navigate the complexities of implementing sustainability initiatives, ensuring that they are executed effectively and deliver the desired outcomes.

Challenge 6: Supplier Landscape is Fragmented

The fashion industry’s supplier landscape is highly fragmented, making it challenging to coordinate sustainability efforts across multiple suppliers and geographies. This fragmentation can hinder progress towards decarbonisation.

Action: Make Collaborations Action-Oriented

To address this challenge, fashion brands need to foster action-oriented collaborations with suppliers, focusing on shared sustainability goals and concrete actions. By building strong partnerships and aligning on objectives, brands can drive meaningful change across their supply chains.

How Trace Consultants Can Help:

Trace Consultants facilitates action-oriented collaborations between fashion brands and their suppliers. By helping to establish clear objectives and shared commitments, Trace Consultants ensures that collaborations are focused on achieving tangible sustainability outcomes, driving progress towards decarbonisation.

Navigating the Path to Decarbonisation with Trace Consultants

The fashion industry faces significant challenges in its journey towards sustainability and decarbonisation. By addressing these challenges with targeted actions—such as creating commercial value from sustainability, focusing on material transitions, and boosting execution management—brands can make meaningful progress in reducing their environmental impact.

Trace Consultants provides the expertise and support needed to navigate this complex landscape, helping fashion brands develop and implement strategies that drive decarbonisation while aligning with business goals. Whether your organisation is looking to enhance supply chain transparency, build a robust decarbonisation roadmap, or foster action-oriented collaborations with suppliers, Trace Consultants can help you achieve your sustainability objectives.

For more information on how Trace Consultants can assist your organisation in driving progress toward decarbonisation, reach out to their team of experts today.

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‍Contact us today, trace. your supply chain and procurement consulting partner.

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Driving Operational Excellence in the Critical Minerals Supply Chain

The critical minerals sector is an increasingly vital component of the global economy, underpinning a variety of industries from technology and renewable energy to defence and aerospace. As the world pivots towards sustainable energy sources and technologies, the demand for critical minerals such as lithium, cobalt, nickel, and rare earth elements has surged. This demand places immense pressure on the supply chains tasked with extracting, processing, and delivering these minerals. For Australia, a leader in the mining sector, driving operational excellence within this supply chain isn't just beneficial—it's essential.

Understanding the Critical Minerals Landscape

Critical minerals are pivotal due to their essential role in high-tech applications and their supply risk concerns. They are integral to modern technologies like electric vehicles (EVs), wind turbines, and various electronic devices. However, the supply of these minerals is often concentrated in a few countries, which can lead to geopolitical risks and supply disruptions. Recognising these challenges, Australia has taken proactive steps to secure and expand its position in the global critical minerals market.

The Role of Technology in Enhancing Supply Chain Operations

Leveraging technology is crucial in enhancing the efficiency and sustainability of the critical minerals supply chain. Advanced data analytics, for example, can predict maintenance needs and process bottlenecks, reducing downtime and increasing productivity. Furthermore, implementing Internet of Things (IoT) sensors along the supply chain can provide real-time data on equipment status and environmental conditions, allowing for better decision-making and reduced operational risks.

Blockchain technology also presents a unique opportunity to improve supply chain transparency and traceability. By creating a tamper-proof record of the movement of minerals from extraction to final delivery, stakeholders can ensure compliance with ethical sourcing standards and reduce the risk of fraud.

Sustainable Practices: A Core Component of Operational Excellence

Sustainability is no longer just a buzzword in the mining industry; it's a business imperative. In the context of critical minerals, it involves environmentally responsible mining practices, efficient use of resources, and minimal environmental impact. For Australia, with its rich biodiversity and unique ecosystems, adopting sustainable mining practices is particularly crucial.

Water management is a significant aspect of sustainable mining. By using advanced water recycling and treatment technologies, mining operations can reduce their water usage and minimise their environmental footprint. Similarly, renewable energy sources, such as solar and wind, can be integrated into mining operations to decrease reliance on fossil fuels and reduce greenhouse gas emissions.

Strengthening Supply Chain Resilience

Resilience in the critical minerals supply chain involves the ability to anticipate, prepare for, respond to, and recover from disruptions. This could be anything from natural disasters and pandemic outbreaks to trade restrictions. Diversifying supply sources and investing in local processing facilities can help mitigate some of these risks. Additionally, forming strategic alliances and partnerships can provide buffer capacity and flexibility in the supply chain.

The Australian government and mining companies can also play a role in enhancing resilience by investing in workforce development and community engagement. Ensuring that the workforce is skilled and communities are supportive of mining activities not only contributes to smoother operations but also builds a buffer against operational disruptions.

Regulatory Frameworks and Policy Support

Effective regulatory frameworks are essential to govern the extraction and processing of critical minerals. These policies need to balance economic growth with environmental protection and social welfare. Australia's critical minerals strategy, which outlines the government's approach to growing the sector, is an excellent example of how policy can guide operational improvements across the supply chain.

Furthermore, international cooperation and alignment on regulatory standards can facilitate smoother trade and reduce bottlenecks in the global supply chain. As a leading supplier of critical minerals, Australia has a pivotal role in shaping these international standards and practices.

Driving operational excellence in the critical minerals supply chain is a complex, multi-faceted endeavour that requires a coordinated approach involving technology integration, sustainable practices, resilience building, and regulatory support. For Australia, a country at the forefront of the critical minerals industry, the stakes are particularly high. As global demand for these minerals continues to grow, so too does the opportunity for Australia to cement its position as a global leader in this critical sector. By focusing on innovation, sustainability, and strategic partnerships, Australia can enhance its supply chain operations and contribute to a more stable and sustainable global critical minerals market.

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