The Greenhouse Gas Protocol Corporate Standard classifies a company’s GHG emissions into three scopes:

• Scope 1 emissions are direct emissions from owned or controlled sources.
• Scope 2 emissions are indirect emissions from the generation of purchased energy.
• Scope 3 emissions are indirect emissions (not included in Scope 2) which occur in the company’s value chain – both upstream and downstream..

Cutting Direct Emissions is Not Enough

Direct emissions are the primary focus for most companies, but it’s not nearly enough to stunt global warming and deliver on the Paris Agreement. Since scope 3 emissions usually account for more than 70% of a business’s carbon footprint but aren’t generally reported on ESG (environmental, social and governance) reports, shifting focus to this class is crucial in reaching climate targets.

In November, industry players and the world’s largest sovereign wealth fund, Norges Bank Investment Management (NBIM), gathered in Paris to discuss the advancement of scope 3 emissions. Similarly, Yara is working with several food companies to collaborate on this type of emission and has asked a wide selection of our suppliers, partners, and customers to formulate an action plan. Companies cannot tackle this alone – collaboration is the only way.

Nicolai Tangen, the CEO of Norway’s $1,3 trillion fund, emphasised its efforts in investing in companies with net-zero targets. He also disclosed a few interesting numbers: in its portfolio of more than 9,000 companies, as much as 70% of emissions come from only 174 companies. This reveals the weighty responsibility large companies have. Companies like Yara have the power to drive entire value chains in the right direction, but it would require new thinking.

We Must Move Downstream

From Yara’s point of view, we’ve reduced our emissions by 50% and are on course to decrease them by an additional 30%. Even so, our numbers indicate that 78% of our combined emissions fall within scope 3, suggesting that it’s not enough to cut upstream production – we must move downstream to cut field emissions too. Next year we will introduce renewable energy-based fertilisers to significantly reduce food production emissions, from chips and bread to milk and orange juice.

The same applies to other industries that source from farmers, like the fashion industry. Fossil-free alternatives in producing and transporting cotton clothing, for example, can significantly reduce the industry’s carbon footprint.

I recently welcomed Argentina’s largest potato farmer, El Parque Papas, to our head office in Oslo. The company’s leader, Walter Hernandez, recognised his role in reducing emissions, stating, “Mass production of potato chips is a very complex operation involving many elements. It is my mission to introduce a completely green, emission-free potato in 2024.”