Shaping the Path Forward: Research and Solutions for Scope 3 Emissions

Having completed the mid-term report for the Scope 3 emissions reduction project on October 17, I have come to realize that engaging with stakeholders and incorporating their feedback over the past two months has greatly enhanced the quality of our research. Moreover, I have concluded that achieving measurable reductions in Scope 3 emissions requires sustained collective action among various stakeholders, including corporations, governments, and markets. This blog will outline the progress of the project, share insights gained from research and presentations, and reflect on collaborations with clients, team members, and members of the class.

1. Project Progress

Our client, a venture capital firm investing in early-stage climate tech startups, is particularly interested in the pathways to successfully measuring and reducing Scope 3 emissions, as well as potential solutions offered by startups. Consequently, our team devised a plan to investigate (1) the historical background of Scope 3 emissions, (2) successful pathways, (3) the relationship between measurement and reduction, (4) drivers of reduction, (5) the business case for reducing emissions, (6) the current state of measurement and reduction, and (7) potential solution-providing startups. Prior to the October 17th mid-term report, we focused on areas (1) through (4). In the coming weeks, we will concentrate on (5) through (7). Overall, the project is progressing as planned. However, with respect to expert interviews, we have only secured four out of the 28 targeted interviews. To address this, we have consulted with the client and are exploring ways to secure meaningful interviews, including leveraging the client’s network.

2. Research

Through desk research and expert interviews, we have explored the history, pathways, and drivers of Scope 3 emissions reduction, along with case studies in the fashion industry. Our findings revealed several interesting insights. For instance, while voluntary disclosures of Scope 3 emissions have increased, regulatory measures have been met with varying success—such as the EU’s implementation of regulations, in contrast to the U.S. SEC’s failure due to industry pushback. This suggests that the widespread adoption of disclosure regulations is likely to proceed gradually, with stakeholder consensus building over time.

Additionally, we learned that companies voluntarily disclosing their Scope 3 emissions tend to see initial increases in emissions, but those offering detailed breakdowns often experience reductions over time. In a case study of major fashion industry players, we found that companies providing transparent disclosures of their emissions generally showed a downward trend in emissions. However, it became clear that emissions should be measured by a per-unit basis to fairly evaluate the trend of emissions, rather than in aggregate, given the companies’ increasing revenues.

Moreover, expert interviews underscored the importance of collaboration. For example, a conversation with a professor specializing in the circular economy revealed that repairing and reselling clothing can significantly reduce greenhouse gas emissions by curbing new production. Large fashion companies are building business models around repairs and resale by partnering with startups, a key insight we gained from the interview. I also learned that systemic challenges, such as the exploitation of low-wage workers in developing countries, complicate these efforts, as the cost of new production remains cheaper than repairs in high-wage countries. This illustrates that Scope 3 emissions solutions must consider broader global economic issues.

Despite the challenges, innovation is advancing steadily. New methods for measuring and reducing Scope 3 emissions are emerging, and there is a long-term potential for cost-effective reductions.  However, the hurdles to achieving voluntary significant reductions are significant. It will be crucial to address these challenges through policies, market pressures, and innovation. Our research indicates that carbon pricing policies, market responses to tail risks such as oil price spikes or supply chain disruptions, and technological advancements will be key drivers of Scope 3 emissions reduction. Therefore, stakeholders such as governments, markets, and companies need to take collective action to reduce Scope 3 emissions.

3. Presentations

Effective presentations require clarity and audience-centered content. I learned that it is vital to align the storyline early when team members create separate slides to avoid incoherence. Despite this, we noticed inconsistencies in the slides, which highlighted the need for frequent team meetings to ensure alignment. Furthermore, while we focused on content preparation, we did not prioritize the time management and delivery aspects of the presentation. We should have rehearsed and provided feedback to each other to improve the overall quality.

4. Stakeholders

Building a strong feedback loop with stakeholders is essential to the success of any project. I realized that incorporating feedback from clients, team members, and classmates significantly enhanced the quality of our research. To receive meaningful feedback, it is crucial to present concrete proposals—even in the form of hypotheses—to encourage specific feedback. Here are a few examples:

(1) Client

Since the client does not have all the answers, it is effective for us to propose hypotheses or findings, enabling collaborative discussions. For example, when presenting data on the Scope 3 emissions trends of three major fashion companies and the associated reduction strategies, the client suggested that cross-industry solutions might be more promising than industry-specific ones due to larger market potential. By offering concrete proposals, we were able to foster a mutual learning environment and generate new ideas.

(2) Team

I learned that while dividing tasks within a team is necessary, maintaining frequent information sharing is equally important. Each member handled a different aspect of the presentation, but as we progressed, the content began to diverge from initial expectations. Frequent communication is key to keeping everyone on the same page and ensuring the creation of a cohesive presentation.

(3) Class

Peer reviews from classmates and professors improved the quality of our research. Listening to other teams’ presentations introduced us to new visualization techniques and analytical approaches that we incorporated into our own research. Our professor provided valuable advice on including a consumer perspective and refining our methodology. This experience underscored the importance of diverse input in enhancing the quality of our work.

5. Key Learnings

Over the past two months, I have learned key elements of project execution and implications for Scope 3 emissions:

(a) A fast feedback loop, in which advice is obtained from clients, team members, professors, and experts and reflected in research, will improve the quality of the project.

(b) Reducing Scope 3 emissions cannot be achieved through voluntary efforts by companies alone because this goal has globally systemic challenges, requiring collective action by governments, markets, and companies in their respective areas of expertise.

6. Next Steps

We have completed research on the historical background and key trends of Scope 3 emissions measurement and reduction, as well as the pathways and drivers necessary to achieve this. Moving forward, we will focus on investigating the business case in greater detail. By analyzing successful and unsuccessful case studies from various companies, we aim to identify the types of solutions required for effective Scope 3 emissions measurement and reduction. After that, we will explore startups offering these solutions and assess how our client's portfolio companies can contribute. Through this research, we aim to develop comprehensive recommendations, covering both broad trends and specific solutions.