In 2024, it was estimated that 92% of local authorities in the UK reported on Scope 1 and 2 emissions. But a much smaller percentage reported their Scope 3 emissions. In particular, it is supply chain emissions that are being overlooked – an area we know can account for the majority of an organisation’s overall carbon footprint.
SmartCarbon Consultant, Jack Spence, outlines some of the challenges facing local authorities in collecting supply chain emissions and identifying where carbon intensity lies. And he identifies where progress could and should be made in 2025.
Measuring, monitoring and reporting on supply chain emissions are challenges that organisations across every industry and sector are currently wrestling with. For local authorities that task is made even greater, given that they are expected to set the tone for the communities they serve. Bearing in mind that local authorities have jurisdiction over many aspects of daily life – from transportation to energy efficiencies, spatial planning to social housing – embedding sustainability into these organisations is undoubtedly crucial if we are to progress towards Net Zero as a country.
According to the Local Government Association (LGA), councils have an influence on more than 80% of an area’s emissions. For this reason, a government study recently showed that local climate action had the potential to achieve Net Zero by 2050 for half the cost of a broader, national approach – delivering three times the financial return in the process.
Interestingly, nearly two thirds of councils in England have set themselves the goal of achieving either Net Zero or carbon neutrality by 2030 – 20 years ahead of the national target. Yet, while there are some local authorities leading the way in the field of carbon accounting (and we would count a number of our own clients among them) it’s safe to say that there’s a lot of work to be done around the UK before we reach the end of this decade.
Although a recent Local Government Association guide suggested that 67% of authorities were reporting on some Scope 3 emissions, it acknowledged that this is largely restricted to staff business mileage, water and transmission and distribution losses from electricity consumption. For the most part, value chain emissions tracking currently falls into two camps: those authorities using the expenditure-based
reporting model and those yet to measure supply chain emissions at all.
The pros and cons of expenditure-based reporting
For some time, expenditure-based reporting has been utilised as a tool to help organisations incorporate supply chain emissions into their carbon accounting. This approach demonstrates a willingness to factor in Scope 3 emissions and by using financial data, it presents a broad picture of a supply chain’s size and associated emissions.
However, there are clearly deficiencies in the expenditure-based reporting model and it has never represented a long-term solution. Indeed, under the expenditure-based model achieving Net Zero is impossible because it neglects to account for the real-world efforts of suppliers to reduce emissions and instead simply calculates impact based upon economic activity. This approach lacks specificity.
In the case of local authorities, this simplified model also fails to incentivise sourcing from decarbonised suppliers because emissions are merely calculated based on economic output. Following this model, the only route to Net Zero for a local authority would be to eliminate the procurement of goods and services altogether – an avenue that is clearly not open to them.
For local authorities, the solution is to progress from the expenditure-based approach to real-world carbon accounting amongst suppliers. By empowering suppliers to measure, monitor and, most importantly, reduce their carbon emissions, local authorities can then gather more accurate data that will form the basis for Scope 3 emissions reporting.
It should also be noted that an important step on this journey is to utilise emissions factors linked to the materials themselves rather than cost. An example of this would be the factors available through the UK Department for Energy Security & Net Zero (DESNZ) for concrete production.
While these factors are not specific to a supplier, they do reflect UK production of the materials, and most importantly the emissions can be calculated based upon volume of materials rather than expenditure. This approach represents a short-term improvement as organisations progress towards utilising factors that are entirely specific to the actual product used.
The next step in the reporting journey is therefore to help the supply chain step into the reporting practice so that the reporting company can allocate their share of the actual emissions relative to the goods or services purchased.
It should also be noted that moving towards more accurate supply chain reporting serves to reward those suppliers doing the right thing and raises standards throughout the supply chain. In this way, carbon accounting becomes central to the procurement process.
To put it a different way: trading organisations are incentivised to use low carbon sources and report preferable carbon emissions, whereas there is little or no incentive under the expenditure-based model. As Dr Katherine Sugar of the University of Manchester commented: “About £300bn per annum is spent on public procurement in the UK alone. That’s a huge amount of money and we need to start thinking about how procurement can help us in the transition to Net Zero.”
One key initiative that is already working to embed carbon reporting and carbon reduction planning into public sector procurement is Procurement Policy Notice (PPN) 06/21. Importantly, PPN 06/21 requires in-scope Government contracts of a value in excess of £5 million to require suppliers to publish their carbon footprints and Net Zero plans. However, suppliers have not been required to include value chain reporting as part of this.
Based on the fact that purchased goods and services in the public sector can make up to 99% of supplier emissions, a move towards value chain reporting will be essential as local authorities and other government bodies look to build a more accurate picture of their emissions. In this way, they will also have the ability to help drive positive change.
A strategic approach to acquiring supply chain emissions data
At SmartCarbon we have worked with a number of local authorities to base their reporting around real-world emissions. For local authorities this is particularly challenging because their supply chains can include energy and material intensive organisations such as construction businesses, as well as care providers – an industry typically not advanced in terms of reporting.
Our starting point with local authorities is always to understand the organisation’s starting point – i.e. have they been reporting supply chain emissions or not. From there we work with internal teams to engage directly with suppliers and understand where carbon intensity lies. This is a critical step because it is essential to prioritise reporting and reduction planning in the areas that can have the greatest impact.
To begin measuring carbon emissions from within the supply chain it is, of course, necessary to have the appropriate tools available. This is where the SmartCarbon platform comes in to enable the collection of data. Our tool comes in three different forms:
- SmartCarbon Lite – designed for micro and small businesses within a supply chain
- The SmartCarbon Supplier module – for SMEs and larger organisations with more employees and a substantial carbon footprint
- A free template for those organisations already measuring their emissions, enabling them to supply local authorities with all necessary emissions reports.
The next step is to help local authorities exercise their significant buying power to initiate positive changes within their value chains. In driving improvements in supply chain reporting we have found that guided reporting programmes are crucial. Showing organisations how to report and sharing best practice can help to drive adherence from suppliers.
In recent months we have also supported a number of our clients through the provision of webinars, designed to give suppliers a firm grounding in reporting methods. In addition, we have worked with local authority clients to assist their procurement departments in building emissions reporting and other sustainability criteria into their framework.
By working hand in hand with suppliers to share the responsibility for meeting carbon reduction targets, it is possible to make the meaningful changes required to help all industries make progress on their Net Zero journeys.
Join Newcastle City Council, Sunderland City Council, Gateshead Council, Redcar and Cleveland Borough Council, Durham County Council, North Tyneside Council and South Tyneside Council in working with the SmartCarbon team to measure, report and reduce on your supply chain emissions. Book a demo now.