Chemical-makers are working across the supply chain to capably measure and monitor greenhouse gas emissions as commitments for 2030 and beyond come into view.

Tackling Scope 3 emissions is a challenge for nearly all industries, as it involves assessments of materials and processes outside of a company's direct control. Reliable measurement standards and protocols on Scope 3 emissions are essential to the chemical sector because 77% of its emissions arise from the supply chain, according to Together for Sustainability (TfS), an industry-driven initiative driven by procurement officers at leading chemical-makers.

TfS released a Product Carbon Footprint Guideline in 2022 for calculating chemical product emissions. It will enable suppliers and corporations to produce and later share high-quality carbon footprint data. The program aims to provide product-level information for identification, tracking and reducing Scope 3 GHG emissions. TfS has 47 members, representing a global annual turnover of over $800 billion.

Hitting the target

Currently, 76% of the Billion-Dollar Club — Chemical Week by S&P Global's annual ranking of the world's top 100 chemical-makers with publicly disclosed revenues — has committed to carbon-neutral or net-zero goals by 2050, and 88% has set interim reductions for 2030, according to a Chemical Week survey of climate-related disclosures earlier this year. Most have well-defined Scope 1 and Scope 2 targets, but Scope 3 ambitions are less clear.

CO₂ emissions grew to an all-time high of 36.8 gigatons in 2022, according to the International Energy Agency (IEA). However, global growth in emissions was "lower than feared," the IEA said. Emissions grew only 0.9% year over year, despite spiking inflation, an energy crisis in Europe, oscillating geopolitics, trade issues and all-time high input from coal emissions — nearly 15.5 gigatons.

The chemical industry remains one of the largest emitters of GHGs, producing more than any country except China and the US. Although the industry is an engine for developing lower-carbon solutions and materials, it sits at the crossroads of the three most GHG-emitting sectors — energy, industrial and transportation. A silver lining exists, perhaps, because emissions from those three sectors have remained relatively even from 2021 to 2022, after the previous year's major leap due to COVID-19 rebounds.

It is not only critical to measure Scope 3 emissions but also to start making reductions if 2030 targets are to be met, TfS said.

"Scope 3 targets are an area where companies are not in complete control," said Jennifer Jewson, chief procurement officer of LyondellBasell Industries NV and new TfS president. "I think a lot of chemical companies are a little intimidated by it and don't have a Scope 3 ambition as a result." Initiatives such as TfS help address that by providing a "strong foundation of good processes, good data and good measurement."

EXPLORE FURTHER: See the top 30 chemicals companies' net-zero and related emissions reduction goals. Click here for the downloadable file.

LyondellBasell aims to achieve net-zero Scope 1 and Scope 2 GHG emissions from global operations by 2050. To that end, the company has set a 2030 GHG emissions reduction target of 42% for Scope 1 and Scope 2 emissions relative to a 2020 baseline. In 2022, the company established a 2030 Scope 3 GHG emissions reduction target of 30% relative to a 2020 baseline. Efforts such as the Product Carbon Footprint Guideline will "allow LyondellBasell and industry to work faster and be more harmonized on Scope 3 targets," Jewson said.

The ultimate goal is to use primary GHG emissions data, which will take time as measurement and monitoring efforts mature.

"We're going to have to look at how these products are produced and their footprint from secondary data first," Jewson said. "That data needs to be credible so you can set a baseline. And you need a trusted platform where suppliers can go in, and we can share the data. You want, ideally, to get to primary data, but that's going to take time."

Scope 3 solutions

TfS and members are working on a program with Siemens AG on a tool to exchange emissions data across the supply chain securely. TfS kicked off a pilot of the Product Carbon Footprint data-sharing solution, a platform using Siemens' Sigreen technology, that enables TfS members and suppliers to share upstream product carbon footprints. "It will make it easier for businesses to conduct cross-industry comparisons and compile and manage their emissions across all three scopes," TfS said. The pilot is expected to be completed in early 2024.

LyondellBasell is working closely with suppliers to improve alignment and assess emissions and sustainability commitments across the supply chain, Jewson said. "A lot of our suppliers do have goals for 2025 and 2030, but they're still at the beginning of this journey. I hope that a lot of our suppliers will want to have the same ambitions, and we're trying to bring them along with us."

LyondellBasell has more than 30,000 suppliers, underscoring the scale of the challenge. "Larger companies and suppliers are more engaged," Jewson said. LyondellBasell works closely with suppliers on their own sourcing methods and also engages in areas such as energy efficiency and materials used, Jewson noted.

"I think for smaller suppliers, it is probably a little harder for some because of the cost and effort involved, but it is very important to bring everyone ... into the sustainability fold," Jewson said. "You start with the bigger suppliers and get that moving in a good direction. I do think it will have a trickle-down effect when we get to the smaller suppliers as initiatives mature."

S&P Global Commodity Insights reporter Jameson Croteau produces content for Chemical Week magazine. S&P Global Commodity Insights is a division of S&P Global Inc.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.