New Accenture research changes the equation. Through our analysis, we can provide supply chain network visibility beyond Tier 1. These are the suppliers that companies work with directly. We can provide visibility all the way up to the extraction of natural resources. This has led to deep insights into the main drivers of upstream emissions—"hot spots”—by value chains across industries and geographies. Our research provides a new lens that allows companies to see what’s strategically important to the supply chain and where to focus their efforts. 

• Network complexity strongly influences emissions strategies. In some industries, most of their upstream emissions are concentrated in suppliers closer to the purchasing company. These sectors include energy, utilities and natural resources. In others, upstream emissions are concentrated in suppliers further up the supply chain. Aerospace and defense, high tech, and automotive are good examples. Consider high tech. Upstream emissions in this industry are a significant portion of its total. On average, 80% of high tech companies’ upstream emissions come from Tier 2+ suppliers. High tech also has a complex, multi-tier supplier network. This means less visibility to the sources of upstream emissions.

• Sources of emissions vary significantly by industry sector. For some industries, hot spots are power generation. For others, it may be raw materials and transportation. And importantly, those hot spots also could vary within the same industry depending on where in the supply chain a supplier sits. As a result, companies need to identify and target the right set of hot spots to make the largest impact. This requires visibility across multi-tier suppliers beyond those in Tier 1. Without it, companies may end up focusing and spending resources on actions for different sources that ultimately may not have much of an impact on reducing overall Scope 3 emissions.
  
  The same industry faces different emissions challenges in different regions. Nearly all supply chains depend on global supplier networks. But the degree of dependency on local versus global suppliers varies by country, even in the same industry. For example, for the Chinese high tech industry, most of the upstream emissions—79% of total—across multi-tier suppliers are generated within China. That figure drops to 59% and 46% for Japan and the US and UK high tech industries, respectively. With most of upstream coming from suppliers outside their home countries, these industries will find it more difficult to gain the required visibility to trace and audit those emissions.
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• Within an industry, a supplier’s location has a big impact on its emissions. Understanding the exposure to the emissions profiles of different countries across the supplier base is vital to creating supplier selection strategies to avoid exposure to increased emissions due to geography. For example, when comparing the Indian and US metals industry it becomes clear the consumption of energy raw materials (petroleum and natural gas and coal) by the Indian metals industry is far greater than the corresponding industry in the United States. That’s because the iron and steel industry—the main metal production industry in both countries—is powered by different sources in each. In India, the energy raw material (mainly coal) supplying industry comprises 77% of all upstream emissions. In the United States, it’s only 10%.