Commerce as a key factor in tackling climate change − achieving low-carbon targets requires collaboration across the value chain

In 2022, the commerce sector’s emissions as a whole amounted to approximately 28.3 million tonnes of carbon dioxide equivalent (MtCO2e), of which the share of the daily consumer goods trade was 54 per cent, the share of the specialty goods trade 36 per cent and the share of the technical trade 10 per cent. Almost 98 per cent of the total emissions were generated in the value chains of companies in the sector.

However, the commerce sector has a significant opportunity to influence the operation of its value chain to mitigate climate change, as it plays a key role in both supply chain management and the consumer interface at the same time.

“Finland’s goal is to be carbon neutral by 2035, and the commerce sector is committed to doing impressive work to achieve this. For the first time, our updated roadmap covers emissions from the entire commerce sector’s value chain, thereby identifying the overall impact of operations,” says Kari Luoto, Managing Director of the Finnish Commerce Federation.

The commerce sector aims to be carbon neutral by 2035 and nearly emission-free by 2050. This requires the cooperation and active lobbying of many different operators, as emission reductions in the transport and energy sectors, for example, have a significant impact on achieving the commerce sector’s own emission targets. Strengthening stakeholder dialogue and capacity-building in the sector are key, as are support and policy measures to strengthen the operating conditions of the service sector.

“Creating a fair and predictable regulatory environment is important for companies to dare to invest in low-carbon solutions. Regulation should not create an unreasonable burden for companies,” Luto summarises the wishes of companies in the sector for decision-makers.

Emissions from the manufacture and use of products sold are highlighted in each industry

The roadmap shows that the largest share of emissions in all industries is generated by the manufacture and use of the products sold. This means that the biggest impact in the commerce sector can be achieved by reducing emissions in the value chain (scope 3).

“Although the commerce sector’s own emissions account for less than one per cent of Finland’s total emissions, the climate actions of companies in the sector have a broad impact on the entire value chain and on the opportunities for customers to live more sustainably,” reminds Luoto.

By definition, a company’s value chain emissions occur elsewhere than in its own operations, which can make it more challenging to identify emissions as being due to the company’s operations.

“Emissions from the value chain overlap with those from other companies, which is why it is advisable to implement emission reduction measures together with relevant stakeholders, such as commodity producers or logistics operators,” says Lauri Leskinen, Senior Advisor at the Finnish Commerce Federation and Project Manager for the commerce sector’s low-carbon roadmap.

In the specialty goods and technical trade, product supply chains are long, complex and globally fragmented.

“There are huge differences in the skills and expertise of our subcontractors. Thus, different operators in the commerce sector have different opportunities to influence the emissions in the value chain,” Leskinen notes.

Science-based climate work to achieve carbon neutrality in the commerce sector by 2050

The total emissions from the commerce sector can be reduced by all companies’ commitment to climate work and by setting ambitious targets and measures also for the company’s value chain. As part of the carbon roadmap, four different scenarios were built to assess the development of emissions in the commerce sector and the effectiveness of selected emission reduction measures:

• The basic career scenario describes how emissions will develop if the turnover of companies in the commerce sector continues to grow as it currently does.
• The EU ETS scenario describes decided policy measures and the impact of decarbonisation in society, where the Finnish Commerce Federation does not work proactively to reduce emissions but relies on decarbonisation by other operators.
• The SBTi scenario takes into account the short-term and long-term SBTi emission reduction targets* already set by companies in the commerce sector and publicly communicated by them.
• The extended SBTi scenario describes the evolution of the commerce sector’s emissions if all companies in the commerce sector set short-term and long-term SBTi emission reduction targets.

Of the four built scenarios, only the Extended SBTi scenario describes a situation where the commerce sector will reach net zero by 2050.  The review shows that the commerce sector plays an important role in the whole society’s climate work, and that through cooperation we can achieve our goals in the fight against climate change.

“Many operators in the commerce sector have already set and partially achieved ambitious emission reduction targets. Associations in the commerce sector, on the other hand, have played an important role in sharing information and lobbying,” says Leskinen.

Companies need a consistent and predictable regulatory environment

The previous low-carbon roadmap for the commerce sector, published in 2020, describes changes in the operating environment that would promote the implementation of emission reductions by operators in the commerce sector, such as:

• reduction of electricity tax in the service sector
• climate-target-based procurement support
• supporting self-sufficient electricity generation and raising the lower limit for small-scale generation.

In addition, incentives should be created for operators in the commerce sector to implement low-carbon offerings and emission reductions.

“It is particularly important to follow the development of legislation at the EU level. Supranational legislation should be equal in all countries and EU regulations should be clear,” Luoto notes.

“The commerce sector wants to act as a platform for lower-emission and responsible solutions. However, this requires support from all stakeholders, as the commerce sector is sensitive to decisions made by other operators,” says Luoto.

* Science-based targets approved by the SBTi organisation

Check out the commerce sector’s updated low-carbon roadmap (pdf, only in Finnish)):
Renewable Commerce 2035, part 2 – The commerce sector’s low-carbon roadmap >>

For further information, please contact:

Kari Luoto, Managing Director, Finnish Commerce Federation, tel. +358 (0) 400 688 708, kari.luoto(at)kauppa.fi

Lauri Leskinen, Senior Advisor, Finnish Commerce Federation, tel. +358 44 091 1067, lauri.leskinen(at)tekninen.fi

Background:

According to Petteri Orpo’s government programme, the business sectors have updated their low-carbon roadmap. The aim of the update is to maintain an overview of the situation and an assessment of the measures that are sufficient to achieve Finland’s emission reduction targets and obligations.

The low-carbon roadmap work in the commerce sector was a continuation of the roadmap work “Renewable Commerce 2035” published in 2020. The work involved a wide range of operators in the commerce sector. The steering group comprised experts from the Finnish Commerce Federation, its member unions and member companies, and the roadmap work was facilitated by Gaia Consulting Oy’s specialist team.