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Views from a Board Member:
Imogen Joss, BEM

Navigating the Complexity of Scope 3 Emissions in Healthcare and Financial Services

Imogen Joss, BEM

During July, the Earth experienced its highest recorded temperatures; and unfortunately, this record is likely to be repeated again and again in the coming years. In response to the impact of global warming, one silver lining is that we are observing a growing list of companies and countries announcing net-zero targets by 2050 or sooner with a laser focus on their supply chains.

As someone fortunate to serve on boards across financial services, fintech and cleantech sectors, I am witnessing the pressing need to confront climate change directly – spanning healthcare systems to financial institutions. And as we stand at the crossroads of “environmental health,” the ability to actively manage indirect greenhouse gas emissions, intricately woven into our global value chains, can no longer be ignored.

The Elephant in the Room

Scope 3 emissions present a multifaceted challenge. While Scopes 1 and 2 emissions are more straightforward as they stem from direct operational activities, Scope 3 emissions extend far beyond an organization’s immediate control. They result from a complex interplay of factors across value chains involving suppliers, customers, and partners.

The importance of Scope 3 emissions gains greater significance as we analyze their effects across various sectors. Consider the healthcare industry where estimates range from 80% to 92% of total emissions attributed to Scope 3. This sector’s reliance on medical supplies, pharmaceuticals and equipment underscores the intricate web of emissions that stretch beyond its facilities. Similarly, financial services, which might seem detached from direct emissions due to the nature of their operations, can see Scope 3 emissions- based on Carbon Disclosure Project estimates – surge to a staggering 99.98% of total emissions. This startling fact underscores the interconnectedness that permeates industries seemingly removed from carbon-intensive activities.

Precision Data Holds the Key to Avoid Greenwashing

Monitoring and reducing Scope 3 emissions isn’t solely about contributing to environmental health but rather a fundamental underpinning of sound business practice. This is a good opportunity for public and private institutions to get their houses in order. As I am learning in real-time, “tone from the top” is mission-critical, requiring the C-Suite and board to comprehend the implications of their value chain emissions fully. When a pharmaceutical company, a hospital, or a bank addresses its Scope 3 impact, it should demand the same from its suppliers. Simply put, it will trickle through the supply chain and have a broader effect on large-scale, global decarbonization.

The healthcare and financial services sectors possess inherent skills in navigating the complexities of managing, interpreting and actioning data.  They possess a unique toolkit to advocate for emissions accountability across the supply chain. Just as healthcare relies on clinical data to diagnose, treat, and monitor patient health, and financial services leverage financial data for risk assessment and strategic planning, both sectors can deploy their expertise to ensure suppliers quantify their emissions, which in turn will drive transparency and accountability throughout the value chain.

Taking this one step further, procurement functions should urge suppliers to harness data analytics capabilities to measure and manage their environmental impact. Data capture and the ability to act upon those insights becomes a forcing mechanism that ensures a clearer understanding of a company’s supply chain’s carbon footprint.

Final Thought

We should not wait for climate change to make its way from economic models, scientific conferences and media coverage of climate events directly impacting our daily lives and for future generations. Healthcare and financial services have a track record of tackling big challenges boldly, and organizations need to apply the same thinking and rigor to Scope 3 emissions. Getting this right can lead to transformative industry innovations and significant strides toward net-zero pathways.

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