Explained byBCG

Decarbonize your own operations

How to reduce your company’s Scope 1 and 2 emissions

For any company, conceptually speaking, its direct operations and assets/processes that are owned, controlled, or strongly influenced by the company (and associated GHG emissions) largely fall into one or more of the following categories:

  • How it makes things: via factory processes and other manufacturing operations

  • How it powers things: via electricity and heating in factories and office buildings

  • How it moves things: via vehicles owned or controlled by the company

  • How it grows things: via farms and other agricultural assets producing organic inputs

The mix of these – making, powering, moving, and growing – largely depends on the company’s industry and where it is present within the value chain. Further upstream, a company typically makes and grows things, but further downstream there’s more of a mix, based on the industry.

Here are few examples:

  • Iron and steel manufacturer: primarily makes things

  • Industrial farmer: largely grows things, and may also move things

  • Freight company: moves things

  • Equipment manufacturer: primarily makes things, but also powers and moves things

  • Retailer: mainly powers and moves things

Overview of decarbonization levers

For your company, the options to decarbonize would depend on the available emissions abatement levers for your key operations. Figure 5 below helps to link the following:

  • Abatement approaches, applicable in your relevant industry, as discussed in Step 1

  • Operations addressed by the abatement approach

  • Associated company assets and processes

  • Available decarbonization levers (not exhaustive)

  • Lever maturity, described using approximate ranges as:

    • High: Commercially available, ready for deployment now

    • Medium: Commercially available in ~3-5 years

    • Low: Commercially available in ~7-10 years

Figure 5: Decarbonization levers with maturity, organized by approach, operations addressed, and associated assets and processes. Source: BCG analysis and case experience.

Reflecting on your company’s operations using Figure 5 will help you understand what assets and decarbonization levers your organization can focus on to reduce its Scope 1-2 emissions.

In that vein, building on the above examples, an iron and steel manufacturer would need to reduce emissions from its factories, making use of levers such as using recycled scrap, recovering waste heat, and implementing carbon capture to reduce Scope 1 emissions. An industrial dairy farmer would need to employ conservation agriculture, improve nitrogen use efficiency, use silvopasture techniques (silvopasture refers to process of integrating trees and grazing livestock on the same land in a mutually beneficial manner), and convert to electric tractors to reduce Scope 1 emissions. A freight company would primarily need to use biofuels in vehicles, and/or switch to battery-electric vehicles and trains to reduce Scope 1 emissions. Equipment manufacturers can invest in renewables to reduce Scope 2 emissions. Retailers can likewise do the same (Scope 2), while also shifting their fleets to low-carbon alternatives (Scope 1). Methods for prioritizing different abatement levers will be covered in Step 3: Build your decarbonization roadmap.

Key stakeholders to engage

Decreasing your company's Scope 1 and 2 emissions is largely within your control, and would largely be driven by your sustainability, operations, and engineering teams, in close coordination with other functions. For instance, the following parts of your company would need to undertake specific tasks.

  • Executive management: To set direction and goals for decarbonization, help make investment decisions, and approve funding

  • Central Sustainability: To assess footprint, identify decarbonization options by asset, and develop business cases for emissions reduction

  • Operations and Engineering: To work closely with Central Sustainability to identify feasible solutions and work with outside service providers as needed

  • Finance: To review and approve business cases, and provide access to funding

  • Human Resources: To make resources available for undertaking new sustainability-focused work and providing technical or other training

At the same time, it is likely your company will also need to engage third-party service providers and vendors for assistance.

For example, to reduce Scope 1 emissions from your vehicle fleets, you may need to work with charging infrastructure providers to install charging stations and purchase electric trucks from new/different manufacturers. To make your factories more efficient or replace your gas-fired furnace with a heat-pump, you may need to engage engineering firms for retrofits.

To reduce your Scope 2 emissions, your utility could become a partner in helping you decarbonize. Solar developers are another common vendor for installing onsite solar and batteries. Other brokers may also help you sign Power Purchase Agreements for renewable power. For a deeper dive into how your company can leverage (III) renewable power to reduce emissions, please see Learn more: Procure renewables.