McKinsey & Company
To reduce Scope 3 emissions from t-shirt, beef, and electronics production, retailers can prioritize actions based on their decarbonization potential and proximity in the value chain.
Lead and scale
Convene value chain
Collaborate and catalyze
Advocate and support
Lower-than-average carbon price¹
Higher-than-average carbon price
Tier 4+
Tier 3+
Tier 2
Tier 1
Placement in value chain relative to retailer⁴
Cost neutral³
Average carbon price
Retailer’s role
% of emissions abatement
Cost relative to carbon price²
A
B
C
D
Note: Based on production for 60% cotton, 40% polyester t-shirt. ¹Using an average global carbon price of 50 $/metric ton (Mt) of CO₂ based on World Bank report that states that Network for Greening the Financial System’s modeling suggests that carbon prices need to be around $50 by 2030 in 2010 terms to achieve a below 2°C outcome (State and trends of carbon pricing, World Bank, May 2023) and based on McKinsey analysis that the required global carbon price in 2020 is ~$40–$80 to limit warming to 1.5ºC. ²Cost relative to carbon price is measured by benchmarking decarbonization costs against global average carbon pricing of $50 as the opportunity cost. ³Cost neutral refers to a reduction cost of $0/MtCO₂ equivalent. ⁴Tiers 1 and 2 represent a retailer’s immediate supplier network (ie, direct suppliers and their direct suppliers); further upstream in the value chain are tier 3 and tier 4+. ⁵Based on marginal abatement cost curve that covers Scope 3 upstream emissions, including raw material extraction, agriculture, processing, manufacturing, packaging, and transportation; excludes retail waste and end-of-life emissions. ⁶Electrification of transport, though it has emissions distributed across whole value chain, is attributed to action taker closest to retailer (tier 1 supplier) because of high level of influence over entire supply chain.
17
9
8
11
15
12
10
14
13
18
1
7
16
3
6
5
4
2
Abatement levers across the value chain⁵
Polyester production
1. Cracker carbon capture and storage
Circular materials
16. Closed-loop recycled polyester
4. Biobased feedstock
Cotton cultivation
7. Switch to biodiesel in farm equipment and machinery
2. Biogas for heating
3. Renewable electricity
6. Organic agriculture
5. Regenerative agriculture
Garment manufacturing and logistics
9. Biogas for heating
8. Biomass boilers
11. Renewable electricity
15. Recycled cotton fibers
12. Geothermal energy
14. Equipment efficiency redesign
10. Low-liquor dyeing machines
13. Manufacturing and processing waste reduction
Packaging and transportation
17. Electrification of transport⁶
18. Switch to recycled cardboard
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T-shirt production
Beef production
Electronics production
Tier 5+
Tier 4
Tier 3
Animal feed
6. Biodiesel for on-farm machinery and equipment (feed farm)
24
23
19
20
21
22
4. Conversion from flood to drip or sprinkler irrigation
1. Controlled-release and stabilized fertilizers
5. Use of green ammonia in fertilizer production
2. Variable-rate fertilization
3. Low or no tillage
7. Cover crops
Beef farming
13. Animal health monitoring and illness prevention
9. Efficiency-focused breeding
8. Anaerobic manure digestion
16. Minimized time in feedlots
14. Nitrogen inhibitors on pasture
10. Feed processing for improved digestibility
Ecosystem
23. Management intensive grazing
24. Regenerative silvopastures
11. Ionophores (monensin)
12. Fat supplements in feed mix
15. Fat supplements in feed mix
Transportation and packaging
17. Optimized packaging design
Processing
20. Renewable electricity in value chain (part cycle)
21. Renewable electricity in value chain (full cycle)⁶
19. Switch to recyclable plastics
18. Electrification of transport⁶
22. Electrification of meat plants
Battery
8. Yield improvement and scrap recycling
Materials
15. Switch magnesium to aluminum
14. Glass: increased recycled content
5. Renewable electricity in manufacturing
6. Biogas for heating
Printed circuit board
4. Take-back scheme
3. Low-greenhouse-gas chemicals in fab production
2. Perfluorocarbons gas best practice abatement
1. Renewable electricity in production
7. Recycled battery materials
11. Glass: biogas for heating
12. Plastic: low CO₂ sourcing
13. Aluminum: low CO₂ process tech
9. Aluminum: electrification and renewable electricity
10. Steel: low CO₂ sourcing for steel (eg, hydrogen direct reduced iron, recycled)
16. Substitution of plastics with cardboard
