In the ongoing efforts to curb greenhouse gas (GHG) emissions and mitigate climate change, understanding and addressing Scope 3 emissions has become increasingly critical. Unlike Scope 1 and Scope 2 emissions, which are within an organization’s direct control, Scope 3 emissions stem from indirect activities across the value chain. These emissions often account for the majority of an organization’s overall carbon footprint and therefore play a significant role in sustainability strategies.
What Is Scope 3 Emissions?
Scope 3 emissions are GHG emissions associated with activities that occur outside an organization’s direct operations but within its broader value chain, encompassing both upstream and downstream activities. This means that Scope 3 emissions may include the environmental impacts of:
- Purchased goods and services – Emissions from the production of goods an organization buys.
- Business travel – Emissions from transportation associated with employee business trips.
- Employee commuting – The emissions footprint generated by employees traveling to and from work.
- Waste generated in operations – Emissions from waste management processes for an organization’s operations.
- Transportation and distribution – Emissions involved in moving products through the supply chain, both before and after the product is sold.
The GHG Protocol, an international framework for emissions measurement, has categorized Scope 3 emissions into 15 categories, enabling organizations to systematically assess and report these emissions.
Why Scope 3 Emissions Matter
- Majority of Emissions Footprint
For many organizations, Scope 3 emissions make up the largest portion of their total GHG footprint. According to the CDP (Carbon Disclosure Project), supply chain emissions are on average 11.4 times higher than operational emissions, accounting for roughly 92% of an organization’s emissions. Addressing these emissions is crucial for achieving comprehensive climate goals. - Supply Chain Engagement
Scope 3 emissions offer organizations a pathway to influence their entire supply chain. By engaging suppliers on climate practices, organizations can encourage responsible production, reduce waste, and support emission reductions across industries. For instance, companies can work with suppliers to adopt greener practices, thereby reducing overall emissions even if those activities aren’t directly under their control. - Climate and Business Risks
Scope 3 emissions carry substantial risks, including potential supply chain disruptions due to extreme weather events exacerbated by climate change. High carbon footprints can also affect business reputation, impact consumer loyalty, and limit investment opportunities. By addressing Scope 3 emissions, organizations can better prepare for future risks and align with sustainability-focused investors and consumers.
Measuring and Reducing Scope 3 Emissions
Calculating Scope 3 emissions is complex, as it requires gathering data from a vast network of suppliers and business activities. However, organizations can approach this with a phased strategy to enhance data accuracy over time.
- Identify Relevant Categories
An organization’s first step is to identify the categories that contribute most significantly to its Scope 3 emissions. This will depend on factors such as the company’s sector, supply chain size, and product lifecycle. - Data Collection and Estimation
Collecting accurate data on these emissions can be challenging, especially if supplier data is unavailable. Many organizations start with estimation methods, which might rely on financial spend or distance-based calculations, and progress to more precise methods, such as supplier-specific data, as these partnerships mature. - Continuous Improvement
Over time, companies can refine their data sources, transition from estimations to primary data, and expand the range of Scope 3 categories they report. This phased approach allows for steady improvement in the accuracy of reported emissions and enables companies to target high-impact categories for reductions.
The Role of the GHG Protocol’s Scope 3 Standard
The GHG Protocol’s Scope 3 Standard offers a structured approach for assessing and reporting these emissions. By following this standard, organizations can ensure that they address all relevant categories, meet global reporting requirements, and engage in industry best practices. Furthermore, the standard encourages transparency and third-party verification, which can bolster credibility in sustainability reporting.
Practical Actions for Organizations
- Engage Suppliers
Companies can work directly with suppliers to help them report and reduce their own emissions, creating a cascading effect across the supply chain. Organizations that prioritize suppliers with strong sustainability practices not only reduce emissions but also drive innovation in environmentally responsible sourcing. - Incorporate Scope 3 into Decision-Making
Emissions data can guide companies in choosing suppliers, materials, and processes that align with their environmental goals. For example, companies can shift toward suppliers with lower carbon footprints or implement circular economy principles to minimize waste and emissions. - Set Scope 3 Targets
Organizations are increasingly setting emission reduction targets that include Scope 3 emissions. These targets create accountability and drive organizations to make impactful changes in their value chains.
Conclusion: Scope 3 Emissions Are Critical to Achieving Climate Goals
In the journey toward sustainability, Scope 3 emissions represent both a challenge and an opportunity. While they are complex and difficult to control, they also provide the largest leverage point for meaningful change. By recognizing the importance of these indirect emissions, engaging the supply chain, and improving emissions data, organizations can make significant strides in their sustainability efforts. Achieving these goals is not only vital for combating climate change but also essential for building resilient, forward-thinking businesses that can adapt to a low-carbon future.