Supply Chain: Updating the Environmental Rating
There is a short slide presentation to show how to update your organisations environmental rating. For those wanting further information this page provides the following:
- The reasons why suppliers are rated
- For those new to carbon emissions and CO2 footprinting, an introductory video
- The taxonomy of a STERA rating. This explains how your rating is calculated. It also provides guidance on the cost of improving the rating
- Certification for using renewable electricity tariff
The Reasons Why Suppliers Are Rated
Your customers are using STERA ratings to ensure they select suppliers which will help lower their CO2 footprint.
The STERA rating also takes into consideration the suppliers your organisations selects. The higher their rating, the higher will be your organisation’s rating. For that reason, it is important to select your suppliers with “Good” or “Excellent” ratings.
Just as with financial ratings, your organisation will be awarded a rating based on information in the public domain and which it provides STERA. It is your organisation’s responsibility to ensure the rating, that is provided to your customers, is accurate.
Just as a “Poor” financial rating will have a negative impact on both individuals and companies, a “Poor” environmental rating will harm the brand, make financing more expensive, and will significantly reduce sales. Whereas a “Good” or “Excellent” rating will have the opposite effect.
- The supply chain makes up the vast majority of CO2 emissions (see the Apple example) which is why it is the most important measurement when calculating a carbon footprint.
- Both government legislation and pressure from shareholders are driving organisations to reduce their emissions
- From the 28th October 2021 organisations committed to science-based targets now have to conduct due diligence on their supply chain
- All suppliers will be required to disclose their actions to decarbonise their supply chain
- A rating is a simple, inexpensive and fast way of ensuring your customer can comply with their due diligence requirements
- For those who are new to carbon emissions, play the video made by Microsoft which explains all about “Scope One, Two and Three Emissions.”
A Higher Rating equals INCREASED SALES
Taxonomy of a STERA Rating
There is a maximum of 100 points
- 0 to 19 points = “Very Poor”
- 20 to 39 points = “Poor”
- 40 to 59 points – “Fair”
- 60 to 79 points = “Good”
- 80 to 100 points = “Excellent”
There are seven categories for which points are awarded:
- Commitment to “Net Zero” (5 points)
- The Use of Renewable Electricity (15 points)
- Due Diligence of the Supply Chain (25 points)
- Measurement of CO2 Emissions (10 points)
- Carbon Neutrality (10 points)
- CO2 Reductions (10 points)
- Actions Towards “Net Zero” (10 points)
|Categories||Description||Cost to implement||Points|
|Net Zero||Your organisation has made a commitment to “Net Zero” in line with “Science Based Targets”||Nil||5|
a) Transition to renewable electricity tariff supported by “Guarantees of Origin” as proof. 10 points.
b) Generate renewable electricity on site and /or use battery functionality. 5 Points
The cost of renewable electricity via the grid is generally between €1 to €2 per MWh.
The cost of installing solar or wind generation varies from zero where outside contractors install everything and charge for the power generated to purchasing the equipment and you receive free electricity. Speak to a consultant to compare costs.
|Due Diligence of the Supply Chain||Implemented a structure to verify if your suppliers use renewable electricity.||No Cost. A free app is available to undertake the due diligence||25|
|Measurement of Emissions||
Scope one and two earns 10 points.
Scope three is an additional 15 points
The cost will normally be zero for scopes one and two. Independent verification will range from a couple of hundred euro’s to €15,000 plus.
Scope three is more complex and time-consuming. Software is available to automate the process which will range
Over the past five years your organisation has reduced CO2 emissions by:
10% = 5 points
20%+ = 10 points
For many organisations it is easy and has no cost to reduce your scope three emissions by 20% plus.
Scope one and two will depend on the sector.
|up to 10 points|
After reducing scope one and two three emissions to the minimum, companies are allowed to use “offsets” to mitigate their emissions by investing in projects which reduce emissions elsewhere.
An organisations can be “operationally” carbon neutral 3 points or “Full Carbon Neutral” status 10 points
|The cost will vary from €2 to €12 per certificate equivalent of one tonne of CO2||Up to 10 points|
|Actions Towards Net Zero||A selection of ten different actions earning one point for each||Many activities are at zero cost. Others such as tree planting are relatively inexpensive||Up to 10 points|
Renewable Electricity Certification
Many customers are now requiring that their supply chain uses renewable electricity from the grid. The difficulty is; how does your organisation prove they are compliant?
STERA will audit to ensure compliance and provide a certificate that can be offered to customers (this scheme is operated in conjunction with Changing Planet Solutions).