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Net Zero Ambitions in Water's Supply Chain 02.23
Net Zero Ambitions in Water's Supply Chain 02.23
Net Zero Ambitions in Water's Supply Chain 02.23
For the twenty largest water companies with carbon reduction targets, commitments differ in terms of scope, methodology,
and ambition. The key to water sector carbon neutrality will be collaborative carbon accounting between utilities and the
supply chain.
Most of the largest companies in water’s supply chain have a carbon target, and in a lot of cases it is to have a net zero footprint by
2050. Some notable absentees from the list are Culligan and Core & Main, as well as major Chinese firms, which prefer to say they
will contribute to China’s national target.
Investors are increasingly attentive to environmental, social, and governance (ESG) targets and to making investments contingent on
them, as financial institutions ramp up their own commitments. A corporate net zero target is also a signal to the customer about the
sustainability pedigree of a company – some companies assert that customers in the water sector would not take them seriously
without one.
Not all targets are created equal. Some are seeking to have their targets validated by the Science Based Targets Initiative (SBTI),
considered the gold standard framework for corporate net zero target-setting. It requires companies to submit their targets and
roadmaps to be validated based on climate science endorsed by the UN, CDP, and WWF. The commitment of companies not using
SBTI is trickier to assess. Companies can claim carbon neutrality by buying carbon offsets rather than by reducing their emissions – a
method considered to be less effective in curbing global warming. Actually cutting emissions and creating mechanisms of
accountability to verify the reduction, such as in Suez’s plan are markers of solid commitments.
Another indicator is scope: Scope 1 and scope 2 cover the direct and indirect emissions of a company’s operations, including product
manufacture. Scope 3 goes beyond that and should include both the upstream emissions of the supply chain (e.g. components
and materials) and the downstream emissions from the lifecycle of the product (e.g. the energy used to operate a pump).
Companies define the boundaries of scope 3 differently, and not everyone is committing to tackling scope 3 emissions.
Xylem estimates that almost all its emissions are ‘downstream’ scope 3, meaning the emissions of its utility customers when using its
products. It will therefore need to reduce the impact of its products on a customer’s operations – its carbon handprint – as well as
reducing the emissions of its manufacturing process – its carbon footprint – to meet its targets.
Tackling a product’s handprint taps into the most urgent customer needs, as utilities remain primarily focused on their operational
emissions.
Nonetheless, pressure is mounting for utilities to also tackle their supply chain emissions (scope 3). Signatories to the UNFCCC’s
Race to Zero must now update their plans to include scope 3 by the middle of this year. The move is bringing the carbon accounting of
the supply chain and its customers closer together. Alignment in methodologies has never been more important.
Company HQ Water Long-term carbon reduction goal Which Signed up to SBTI
revenue scopes? target?
14 Jacobs USA $1.9 billion Remain carbon-neutral for scope 1 and scope 2; reach 1, 2 and 3 Yes, target
net zero for scope 3 by 2040 validated