The process of setting science-based supply chain greenhouse gas emission targets - An exploratory study of IKEA Component’s scope 3 target setting process

Abstract: Background: The world is facing global warming because of excessive release of greenhouse gases. The Science Based Target Initiative encourages companies to do their fair share in limiting the temperature increase to 2 degrees above preindustrial temperatures. This is called setting science-based targets. Little research has been made on the target setting process and there are few practical examples of companies setting targets for their supply chain. Inter IKEA, including IKEA Components, need to go through this process and want to understand the best way to do it. Purpose: The purpose of this master thesis is to, in cooperation with IKEA, determine how the process of setting supply chain (scope 3) GHG emission targets should be conducted and to help IKEA Components in doing this. Method: This research has a pragmatic worldview and uses an overall qualitative approach to understand the target setting process for scope 3 emissions. The research questions are answered by a mixed research design using both a case study and mathematical modeling. Conclusion: Setting targets for supply chain emissions is often complex since data availability and possibilities to impact rely on external entities. The general process should include; scoping, creating a GHG inventory, modeling, deciding on time horizons and commitment levels, communicating the targets and tracking progress. Companies can during this process choose to have a varying amount of stakeholder input. Using a bottom-up approach including more stakeholder input seems to be more appropriate for companies with less developed green supply chain management practices. A top-down approach better suits companies with well-developed sustainability practices. Following the, in this research proposed, process and insights will make setting supply chain science-based targets somewhat easier. The need for corporate climate action will only increase and more companies will need to set targets. Hopefully this research can be a small piece of the puzzle in helping these companies and contributing to a better planet.