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As businesses, we're aware of everything we do that generates harmful greenhouse gas emissions. However, what about the actions we indirectly take.
That's where Scope 3 emissions reporting comes in.
This guide will explain what Scope 3 emissions are, the benefits of reporting them, and how to get started.
The Greenhouse Gas Protocol, which sets the global standards for measuring and monitoring carbon emissions, has identified three tiers (or 'scopes') of greenhouse gas emissions.
● Scope 1 covers emissions that come directly from a business. For example, from driving non-electric vehicles or burning fuels on-site
● Scope 2 covers emissions generated from the energy a business uses. For example, fossil fuel emissions from creating the gas and electricity used to heat a building
● Scope 3 covers everything else and can often be the most significant portion of a business's carbon footprint. It's estimated that Scope 3 emissions account for about 87% of all business emissions.
The categories Scope 3 covers include:
1. Purchased goods and services
2. Capital goods (i.e. assets that you use for more than a year)
3. Fuel and energy-related activities not covered as part of Scope 1 or Scope 2
4. Upstream transportation and distribution (by upstream, we mean all the resources used to
create your product or service)
5. Waste generated in operations
6. Business travel
7. Employee commuting
8. Upstream leased assets
9. Downstream transportation and distribution (by downstream, we mean all the resources
used to provide your product or service to customers)
10. Processing of sold products
11. Use of sold products
12. End-of-life treatment of sold products (i.e. emissions from the disposal and recycling of
products)
13. Downstream leased assets
14. Franchises
15. Investments
Essentially, Scope 3 emissions include all the indirect carbon emissions your business is responsible for.
Some businesses must report their Scope 1 and Scope 2 emissions as part of the Streamlined Energy and Carbon Reporting (SECR) framework, as well as certain Scope 3 emissions.
For the majority of businesses though, it’s not mandatory.
However, with the move towards Net Zero, there is the possibility that more businesses will need to report on Scope 3 emissions in the future, and it's something the Government has looked into.
Some countries and regions are already moving towards reporting Scope 3 emissions. For example, the EU's Corporate Sustainability Reporting Directive (CSRD) requires larger companies to start reporting emissions from 2025.
Even if measuring and monitoring Scope 3 emissions isn't mandatory, it can provide a range of
benefits for your business, as well as for the environment.
● You can identify where you emit the most greenhouse gases and take steps to reduce them
● You can work with suppliers, clients, buyers, vendors, employees, customers, and other stakeholders to help them reduce their own carbon emissions
● You can identify ways you can streamline your operations, leading to cost-savings and efficiencies
● You can use the data you gather to make well-informed business decisions
● You can make your business more appealing to prospective clients and buyers, as well as customers. Customers are willing to pay nearly 10% more for sustainable goods
Reporting Scope 3 emissions can be tricky. While it's easy to identify how much gas and electricity your business uses, it's harder to get a handle on factors outside your control.
The key is gathering data from the right external and internal sources. For example:
● You can send a survey to employees asking them how they get to work
● You can ask your suppliers to fill in a form detailing their own carbon emissions – what is Scope 3 to you will be Scope 1 and 2 for them
● You can use information from your own systems. As an example, you could use data from your customer relationship management system (CRM) to determine which stores you sell to and how you deliver your products to them
● Finally, you can use industry benchmarks to fill in the gaps if specific data is unavailable.
The Greenhouse Gas Protocol has a helpful guide to calculating Scope 3 emissions, including how to identify what to measure, what to prioritise, and what calculation methods are best.
It may be that businesses you work with might ask you to make changes to how you work to help them meet their Scope 3 Emission reporting requirements.
For example, Tesco has committed to a Net Zero supply chain and is asking suppliers to prove they’re taking steps to reduce carbon emissions.
In this situation, communication is critical. Ask your partners what they need from you and how they can support you to reach your goals. They may have resources they are happy to share or be willing to work with you on collaborative projects.
It’s easier to work towards Net Zero together than it is to go it alone.
If calculating your Scope 3 emissions sounds daunting, or you’ve been asked to reduce your emissions, we’re here to help.
We're part of the Future Net Zero initiative, meaning we're taking active steps to lower our own carbon footprint, and we can help you reduce yours too.
We'll set you up with an easy-to-use carbon tracking dashboard so you can monitor your emissions, help you set targets, and provide expert advice to help you reach your goals. We can even help you get accredited to show clients and suppliers that you're on the right track when it comes to sustainability.
Contact us today, and let's work together to monitor your Scope 3 emissions.