An article by McKinsey discusses the challenges of addressing Scope 3 emissions, which refer to indirect emissions from activities across the value chain.
It highlights the growing pressure from regulations and investors to reduce these emissions and transform business models.
According to the article, addressing Scope 3 emissions could radically transform business models and create real business value.
Upstream and downstream Scope 3 emissions strategies
McKinsey identifies six levers that companies can use to reduce Scope 3 emissions, including selecting low-carbon suppliers, developing low-carbon products and solutions, building partnerships, adopting circular solutions, and changing commercial models.
The article also provides examples of companies in various industries that are taking these steps to reduce their Scope 3 emissions.
Mining companies
The majority of Scope 3 emissions for mining companies are generated downstream during the processing of mined materials. Therefore, efforts to reduce these emissions require collaboration with downstream players to develop and implement processing technologies with lower emissions, as well as ensuring that the company’s products are specified correctly.
In commodities such as iron ore where collaboration is possible, there are numerous instances of technology adoption through partnerships. Other options include incorporating value downstream and selecting customers who are already utilizing lower-emission technology.
- Mining companies can reduce upstream emissions by procuring from suppliers who offer low-carbon products and transportation services.
- Mining companies have the option to address their downstream emissions by focusing on clients who have low-emission usage processes such as green-steel producers using carbon capture and storage (CCS) or H2, or cement producers using CCS. Another approach to reduce Scope 3 emissions is to adjust their products, or collaborate with downstream stakeholders to adopt processing technologies that emit lower emissions, such as direct-reduced-iron processing with high iron-content iron ore. Finally, mining companies could establish recycling capabilities to manage their emissions.
“Getting Scope 3 emissions right can lead to transformative industry innovations and result in significant strides toward net-zero pathways,” says McKinsey.
Source: Mckinsey
Image of blast furnace at the Indiana Harbor Works of ArcelorMittal Steel: Flickr