Scope 3 emissions account for most of a company's carbon footprint, but they are the hardest to measure. Here's how Hitachi Rail is approaching the challenge.

When I announced Hitachi Rail’s commitment to achieve net zero at the COP26 event last year, it was a question of strategy. Hitachi Rail - as part of the Hitachi group - aims to become net zero in its own operations by 2030, and across its entire value chain by 2050.

As an engineer by background, this is a daunting commitment. Not only because the challenge is significant, but because the target immediately demands an answer to the question: How can we manage what we can’t measure?

Over the last six months, I’m pleased that we’ve made significant progress in this space. Not only in capturing and monitoring the impact of our own operations on the environment, but in keeping track of the emissions of our “value chain.” In other words, our suppliers and customers.

These ‘value chain’ emissions are typically referred to as ‘Scope 3’ emissions - and they are important. Scope 3 emissions typically account for 80 - 90% of a company’s overall GHG outputs. It covers both ‘upstream’ and ‘downstream’ products, transportation by suppliers and business travel, usage of solid products and product disposal. For example, the emissions from our steel suppliers in China, or the emissions generated by how our customers use our trains.

While we have an EcoDesign team dedicated to applying circular methodologies to the design of our products for our customers (for example, our new fleet of Masaccio trains in Italy are 96% recyclable by design), in this blog I want to focus on how we are working with our own suppliers to address their CO2e emissions.

While we have an EcoDesign team dedicated to applying circular methodologies to the design of our products for our customers (for example, our new fleet of Masaccio trains in Italy are 96% recyclable by design), in this blog I want to focus on how we are working with our own suppliers to address their CO2e emissions.

Decarbonise with data

To address this challenge, Hitachi Rail, in collaboration with EcoVadis, have partnered with Normative who provide a digital Carbon Accounting Engine which uses the Greenhouse Gas (GHG) Protocol to estimate total carbon footprint. This is an innovative and tailored approach for Hitachi Rail to solve the challenge of understanding the true volume of Scope 3 emissions of our suppliers without, typically, having direct access to the Scope 1 and 2 emissions data for these suppliers.

With Normative we have used the spend-based methodology which takes the cost of the purchased goods and services and multiplies them by the activity-specific emission factors to estimate the corresponding GHG emissions. This approach has enabled Hitachi Rail to significantly expand our understanding of categories and suppliers that represent the most significant impact from a GHG / Carbon perspective and prioritise activities to address these impacts with our suppliers.

Through this analysis we have learned that ~25% of these emissions of our carbon emissions are generated through our purchasing relationships with just 10 suppliers. We have also been able to determine the categories of spend with the highest levels of carbon intensity. This gives us a clear opportunity to focus our efforts in collaborating with our top supply chain partners to address their emissions as well as a way to track an monitor our progress towards Net Zero over time.

In parallel we are encouraging all of our Suppliers to become registered in the EcoVadis platform and are leveraging the EcoVadis Carbon Action Module capability to engage suppliers in climate action, build capacity and collect primary data. This will also enhance our understand of our suppliers’ sustainability and decarbonisation practices, strengths and areas for improvement.

Partnering with our supply chain to accelerate our decarbonisation strategy

At this year’s global Partners Day, with the theme ‘Sustainable Together’, we underlined the importance of sustainability and decarbonisation for over 3000 of our suppliers around the world, including recognising some key suppliers for their outstanding contributions to the sustainability and decarbonisation agenda in FY21. By making our ‘strategy challenge’ into a ‘shared opportunity’ with our partners, we will engage the full innovative power of the supply chain to drive positive action.

We plan to work with our suppliers over the coming years, with a particular focus on those who have the greatest impact on carbon emissions, on collaborative ways to reduce GHGs in the supply chain. This is a journey which will take time and require a significant contribution from Hitachi Rail and our partners, but through the use of the Normative Carbon Accounting Engine we now have a data-based starting point to help shape our approach and prioritise our resources.

If you’d like to learn more about Hitachi Rail’s sustainability activities, take a look at our sustainability report here.

And if you missed our supplier event, you can watch it now.