Scope 3 greenhouse gas emissions

Since 2019, Baker Hughes emissions teams have completed a multi-year Scope 3 base-lining project. In 2019, we disclosed travel-related emissions and a subset of our logistics-related emissions. In 2020, we added reporting on emissions from the capital goods acquisition of property, plant, and equipment, an expanded view of international shipping across the Baker Hughes enterprise, waste generated from our operations, and a portion of the use of sold products.

In 2021, we significantly expanded Scope 3 emissions reporting to include purchased goods and services, fuel- and energy-related activities, use of sold products and services, a complete view of upstream and downstream transportation and distribution, employee commuting, a complete view of business travel, waste generated in operations, and investments. In addition, through our detailed analysis and Scope 3 emissions quantification work, we've determined that Category 11 - use of sold products - presents the largest category of emissions for our company. Hence, we saw an increase in our total Scope 3 emissions in 2021, due to the increase in sales of our equipment in our TPS business, as well as increase in waste from operations and investments. However, we saw a decrease in all other identified Scope 3 categories in 2021.

This insight has helped us identify ways for designing lower-emissions products and services where it matters most to drive emissions reduction and provide useful information for risk management and scenario planning as part of our climate risk (TCFD) analysis and long-range planning efforts. We are now proactively collaborating with our suppliers, customers, and other stakeholders to assess pathways for reducing Scope 3 emissions. This foundational work will help us finalize our Scope 3 categorical goals in the future as we continue to identify the most effective levers for emissions reductions through our value chain.

Reducing GHG emissions requires a collaborative approach across the value chain. A proactive approach to supplier engagement can contribute to lower Scope 1 and 2 emissions, as well as partnership on reducing Scope 3 emissions.

We engage actively and constructively with our suppliers. By increasing awareness and implementing new programs, we can identify and implement emissions reduction opportunities across our shared value chains. In 2021, we launched our first emissions survey to our supplier base, representing 80% of our direct spend, to begin understanding emissions upstream of our operations from our suppliers directly. This important work has provided insight on how we can better collaborate to drive emissions reductions going forward.

We organized Supply Chain Days - an internal conference open to all employees of Baker Hughes - to promote emissions reductions challenges and create awareness on sustainability topics. We hosted our Baker Hughes virtual supplier conference with the theme of partnering for sustainability, to facilitate exchange of knowledge and best practices with our vast supply chain network, and to achieve emissions reductions goals. We also expanded our quarterly reviews with suppliers to include sustainability topics. This ongoing dialogue and measurement will be key to innovation and continuous improvement in our supply chain.