Tag: Devin O’Herron

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The ESG Report

Supply Chain & ESG: Scope 3 Emissions Reporting Strategy with Devin O’Herron and Jared Connors

 

In this episode of the ESG Report,Tom Fox is joined by Devin O’Herron and Jared Connors of Assent to discuss Scope 3 emissions reporting as the key to disclosure success. They talk about the importance of accounting for Scope 3 in your emissions strategy.

 

 

There are three scope levels within the emissions reporting strategy: Scope 1 refers to things like your vehicle or things you’re doing around your facility; Scope 2 is the purchased heat or electricity powering your facility; and Scope 3 is all those variables outside your four walls. The most important aspect of Scope 3 is purchased goods. This has a large impact on organizations that may not necessarily take in raw materials and directly manufacture those raw materials into a finished good. “Even if your organization designs products and influences those products, you typically will obtain your raw materials components through your supply chain,” Jared says. The supply chain is a very significant factor to consider when coming up with the emissions strategy as a company.

 

A recent study found that Scope 3 emissions are typically 11 times larger than an organization’s Scope 1 and 2 emissions combined. As mandatory climate disclosure legislation progresses into the future, the overall emissions strategy needs to start accounting for Scope 3 as much as possible. “When it comes to Scope 3 emissions in particular, as we think about things like carbon taxes, risk in terms of risk, if you don’t understand what exactly that applies to your organization, you are missing a big opportunity,” Devin stresses. Organizations need to get a handle on their total emissions footprint. You cannot manage what you do not measure. 

 

Resources

Devin O’Herron on LinkedIn

Jared Connors | LinkedIn

Tom Fox’s email

Assent website

 

Categories
Innovation in Compliance

Supply Chain and ESG – What You Need to Know: Episode 4 – Scope 3 Emissions Reporting Strategy with Devin O’Herron and Jared Connors

 

In part 4 of the Supply Chain and ESG – What You Need to Know series,Tom Fox is joined by Devin O’Herron and Jared Connors of Assent to discuss Scope 3 emissions reporting as the key to disclosure success. They talk about the importance of accounting for Scope 3 in your emissions strategy.

 

 

There are three scope levels within the emissions reporting strategy: Scope 1 refers to things like your vehicle or things you’re doing around your facility; Scope 2 is the purchased heat or electricity powering your facility; and Scope 3 is all those variables outside your four walls. The most important aspect of Scope 3 is purchased goods. This has a large impact on organizations that may not necessarily take in raw materials and directly manufacture those raw materials into a finished good. The supply chain is a very significant factor to consider when coming up with the emissions strategy as a company.

 

A recent study found that Scope 3 emissions are typically 11 times larger than an organization’s Scope 1 and 2 emissions combined. As mandatory climate disclosure legislation progresses into the future, the overall emissions strategy needs to start accounting for Scope 3 as much as possible. 

 

Resources

Assent

 

Categories
Blog

Supply Chain and ESG – What You Need to Know: Scope 3 Emissions Reporting Strategy

I recently had the opportunity to visit with several folks from Assent Inc. for a sponsored podcast series entitled Supply Chain and ESG – What You Need to Know. We discussed: ESG drivers with Jared Connors and James Calder; UFLPA, Supply Chain and ESG with Travis Miller and Jamie Wallisch; the New World of Product Compliance and ESG, with Cally Edgren and Devin O’Herron; Emissions Reporting Strategies with Devin O’Herron and Jared Connors; and Responsible Minerals, Supply Chain and ESG, with Jared Connors and Daniel Zamora. Today, we consider a Scope 3 emissions reporting strategy.

We began with a discussion of the requirements for emissions reporting. There are three Scope levels within the emissions reporting strategy. Scope 1 and 2 are those emissions that are owned or controlled by a company, whereas Scope 3 emissions are a consequence of the activities of the company but occur from sources not owned or controlled by it. Connors provided some examples of each Scope, “Scope 1 is such things as your own vehicle fleets or things you are doing around your facility. Scope 2 is purchases such as heat or electricity for your facility, such as from your municipal power source. Scope 3 is all those variables outside your four walls.”

Connors went on to note, “This makes Scope 3 the most important of the three Scope emissions reporting, because it is so broad. It even includes things like employee travel. The most important aspect of Scope 3 is purchased goods, which has a very large impact on organizations that may not necessarily take in raw materials and directly manufacture from fabrication of those raw materials into a finished goods. Even if your organization designs products and influences those products, you typically will obtain your raw materials components through your supply chain. So purchased goods or supply chain is a very huge impact on the overall emission strategy for companies.”

O’Herron pointed to a recent Accenture study which estimated that Scope 3 emissions are typically 11 times larger than an organization’s Scope 1 and 2 emissions combined. With the increasing use of carbon taxes, and as they progress as a key tool, “the overall mission strategy frankly needs to start accounting for Scope 3.” But it is not simply risks but also opportunities, “because when it comes to Scope 3 emissions in particular, as we think about things like carbon taxes, risk in terms of risk, if you don’t understand what exactly that applies to your organization, you are missing a big opportunity.”

He further cautioned that while the conversation today is dominated by carbon, there may well be other minerals which fall under regulatory ambit. Moreover, there are other environmental factors at play, such waste management, recycled content in products, water usage. All of these additional costs that have not been traditionally quantified and accounted for when thinking about the product life cycle and design of the product. He stated, “when we are talking about Scope 3, in a broader context of just carbon, it’s about broadening the measure of impact burn closer to understanding and identifying the truthful cost of how we provision ourselves today.”

The bottom line is that organizations need to get a handle on their total emissions footprint, which includes what they are collecting from their suppliers upstream, their purchased goods or services, and those in Scope 3 emissions. You cannot manage what you do not measure. This means the “idea of diving into these details, has gained such relevancy and traction in the market.” It is providing a common language and identifying these common topics to focus on in terms of getting that information.

This is a big part of the overall strategy, the data collection at each level in the supply chain and how we may interact with our Tier 1 suppliers, but the disclosure that we get from them, there should be policies, procedures and programs around also creating transparency with their upstream suppliers. Connors concluded, “they have an element of pass down accountability as the phrase was coined so many years ago. I actually try to think of it as pass up accountability, because we are thinking about our supply chain upstream and what we need to collect from those organizations in order to meet the expectations of these regulatory pressures or these market disclosure requirements to create and promote transparency, not only in my operations, my four walls, but upstream of me as well.”

Please plan to join us tomorrow for our final post in this series, on responsible minerals, supply chain and ESG.

To listen to the podcast this blog post is based upon, click here.

Categories
Innovation in Compliance

Supply Chain and ESG – What You Need to Know: Episode 3 – The New World of Product Compliance and ESG with Cally Edgren and Devin O’Herron

 

In part 3 of the Supply Chain and ESG – What You Need to Know series, Cally Edgren and Devin O’Herron of Assent join Tom Fox to discuss product compliance and sustainability. They explore how the two worlds are starting to intersect. 

 

 

Making sure products meet regulatory requirements is what product compliance is all about. In recent years, the requirements have been changing. There used to be a focus on safety features like mechanical and electrical safety, but things changed with the RoHS Directive in 2002. That directive was meant to make sure electronic waste from third-world countries was safe. It was one of the first times a regulatory rule had more to do with sustainability than traditional product safety.

 

Manufacturers need to understand that their customers are no longer just concerned with what they hold in their hands at the end of the process – they want to make sure that their suppliers are using responsible processes. The two worlds of operations compliance and product compliance are starting to connect. As we become increasingly aware of the importance and relevance of the social and environmental costs associated with manufacturing processes and the barrier they present towards sustainability, ESG metrics represent another way of managing and measuring these externalities. 

 

Resources

Assent

 

Categories
Blog

Supply Chain and ESG – What You Need to Know: New World of Product Compliance and ESG

I recently had the opportunity to visit with several folks from Assent Inc. for a sponsored podcast series entitled Supply Chain and ESG – What You Need to Know. We discussed: ESG drivers with Jared Connors and James Calder; UFLPA, Supply Chain and ESG with Travis Miller and Jamie Wallisch; the New World of Product Compliance and ESG, with Cally Edgren and Devin O’Herron; Emissions Reporting Strategies with Devin O’Herron and Jared Connors; and Responsible Minerals, Supply Chain and ESG, with Jared Connors and Daniel Zamora. Today we look at the new world of product compliance and ESG.

I certainly see safety as a key component of the ‘S’ in ESG. However, I had always focused on worker safety and perhaps greater environmental safety. Yet consumer product safety is also a component of the ‘S’. This is not new but combines topics and regulatory concerns in product compliance which have been gaining in importance for the past 20 years.

Edgren began with explaining that product compliance is a discipline focused on ensuring that products meet regulatory requirements where they are sold. Further, there is an evolution of those regulatory requirements. Product regulatory compliance used to be more traditionally things like electrical safety or mechanical safety, but then back in 2002, the Regulatory of Hazardous Substances (RoHS) came along. The RoHS directive applied design criteria to electrical products. The significance of this was that for purposes of the RoHS directive, it was not just tied to the safety of the user as traditional product compliance regulations were; it was actually tied to the safety of the third world countries, where the electronic waste ends up.

This created a regulatory obligation with more of a sustainability focus behind it versus the traditional product safety. Over the last 20 years there has been a tremendous explosion of these types of regulatory obligations. These aren’t just nice to do things. Edgren pointed to an example of the European Union’s (EU) Ecodesign Directive which established a framework to set mandatory ecological requirements for energy-using and energy-related products sold in all 27 member states. She noted, “both of these regulations, the RoHS directive and the EU Ecodesign Directive require compliance, or you cannot sell in locations where they are effective.” This is where the product compliance bridge comes back into the area of greater sustainability or environmentally focused regulations.

O’Herron expanded on this by noting, “there’s a lot of connection directly to the E in ESG with product compliance, as there’s a focus on environmental regulations and making sure that your products are meeting those environmental regulations.” But it is more than simply meeting regulatory expectations. He explained it “has to do with externalities. What are these costs of doing business? Not just the financial cost, which are fairly well established. It is the social and environmental costs as well, which have not “traditionally been quantified.”” He provided the example of the “environmental social cost involved with the disposal of toxic chemicals at the end of their life in electronics is unacceptable. We are becoming increasingly aware of the importance and relevance of these externalities and the barrier that they present towards sustainability, environmental, social, and governance metrics represent another way of starting to measure and manage those externalities.”

One of the greatest benefits to ESG, has been not simply the realization of the inter-connectedness of what were seemingly disparate areas of business. It is that companies are taking a much more holistic approach to looking at these issues. Edgren said we may not be there quite yet in the area of safety, but she believes it is an evolving process and dialogue. She said, “what I am seeing and what I have experienced, is we are starting to merge the environmental into the more traditional product safety. We are starting to elevate those conversations which in reality, are just different pieces of the same whole puzzle. We are starting to have those conversations. I don’t think that industry is a hundred percent there yet of connecting product safety to ESG, but that’s certainly part of the message that we are highlighting.”

It is this realization of inter-connectedness that may be the most import consequence from an overall corporate ESG approach. In 2020, the Department of Justice (DOJ) released the Update to the Evaluation of Corporate Compliance Programs which mandated that the corporate compliance function have access to all corporate data. No more siloes for compliance. When you take that attitude and apply it to an ESG framework, you begin to see the power of integrating all these data points to make your overall business more robust, more resilient and more cohesive.

Join me tomorrow where look at a Scope 3 emissions reporting strategy.

To listen to the podcast this blog post is based upon, click here.