As the world continues to focus on combating climate change, it has become increasingly important to understand greenhouse gas (GHG) emissions, including Scope 3 emissions. Learn more about what Scope 3 emissions are, why they matter, and how to measure, monitor and report on them.
What are Scope 3 emissions?
Scope 3 emissions are indirect emissions that occur as a result of upstream and downstream activities from a company’s value chain. These emissions are not directly owned or controlled by the company but often account for 90% or more of a company’s total emissions.
The GHG Protocol breaks down Scope 3 emissions into 15 different categories, which can be further classified into eight upstream and seven downstream categories.
Diagram of Scope 3 Emissions depicting the separation of categories between upstream and downstream emissions.
Webinar | Enabling a Circular Scope 3: The value of reducing your product carbon footprint
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A Scope 3 Example
A global online retailer may sell dishwashers that are manufactured by a third party directly to consumers.
For the retailer, the upstream impact of these dishwashers would include the embodied impact of each material used, the energy consumed in assembling the dishwasher in a factory and the impact of transporting that product to the consumer.
The downstream impacts would include the energy consumed by the dishwasher each time it is used by the final consumer, as well as the impact associated with disposing of the dishwasher at end of life.
Upstream vs downstream emissions
Upstream emissions
Upstream emissions include those generated from activities such as raw material extraction, production, transportation and energy use in manufacturing.
Downstream emissions
Downstream emissions occur from the use, disposal, and end-of-life treatment of a company’s products, such as the energy consumed by appliances or transportation of goods to end-users.
Why should you measure scope 3 emissions?
Measuring Scope 3 emissions is crucial for businesses and public sectors for a range of reasons, including:
- Business Benefits: By measuring Scope 3 emissions, companies can identify opportunities for improvement in their value chain activities and operations, leading to cost savings and increased efficiency and collaboration.
- Rulings and Regulations: Increasingly, companies are required to report their Scope 3 emissions. Failure to do so may result in financial penalties or reputational damage.
- Supplier benefits: Suppliers are increasingly being asked to provide data on their carbon footprint as part of their client’s scope 3 reporting. Reporting on scope 3 emissions can allow suppliers to get ahead of these requirements and differentiate against competitors.
- Public Sector Benefits: Governments can use Scope 3 emissions data to develop policies and regulations that encourage sustainable practices and reduce GHG emissions.
Deep Dive
Scope 3 Data Challenges
Most organisations lack the data needed to effectively measure and reduce their carbon footprint. Find out more about the impacts of this Scope 3 data problem and solutions that span your value chain.
RouteZero
The Anthesis Greenhouse Gas Inventory Management solution
Designed from the insights of over 4,000 GHG footprints globally, RouteZero accelerates the pace with which organisations can assess their impact and develop actionable decarbonisation plans.
Overview of a Scope 3 Strategy
A Scope 3 strategy involves identifying and measuring Scope 3 emissions, setting targets for reducing emissions, and implementing actions to achieve these targets. This process involves collaboration with suppliers and customers to identify ways to reduce emissions throughout the value chain.
Identifying, demystifying and reducing these emissions requires digitisation of emissions data, stakeholder engagement, collaboration and innovative incentive frameworks.
Measuring, Tracking, Reporting and Monitoring Scope 3
Scope 3 emissions are more complex and difficult to calculate compared to scope 1 and 2 emissions. Calculations often start with a directional emissions estimate, such as a spend analysis, to identify emission hotspots while sourcing data from internal databases or third parties, including suppliers or customers.
To measure Scope 3 emissions, companies can use a range of tools and methodologies such as the GHG Protocol or life cycle analysis. To effectively and accurately track and monitor scope 3 emissions requires the implementation of streamlined systems to collect and analyse data across the entire value chain, from suppliers to end-users.
Scope 3 Supplier Engagement Support
Supplier engagement is crucial to achieving Scope 3 emissions reduction targets. Companies can engage with their suppliers to identify ways to reduce emissions, such as switching to renewable energy sources or improving transportation efficiency.
Companies must deliver ongoing, timely communications to support suppliers and comprehensive, actionable guidance and resources. In addition, targeted, personalised training and support to meet suppliers where they are in their climate journey and provide interventions and pathways towards more mature initiatives are needed to build supplier capacity.
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Consumer Engagement Support
Companies can also engage with consumers to reduce Scope 3 emissions. For example, companies can encourage customers to use energy-efficient products or reduce waste through recycling programs.
Get to grips with Scope 3 Emissions
Webinar | Accelerating Scope 3 Emissions
After nearly a decade of incremental progress on Scope 3 accounting and reporting, we have now seen a tipping point moving from pure reporting to measurable action on supply chain issues, with carbon and climate being one of many topics corporates ar using to build supplier capacity and resilience. Meaningful engagement and capacity building with suppliers is crucial because simply asking suppliers to set targets and drive emissions reductions will not yield the level of action that is needed.
Webinar | Reaching Net Zero: Enabling a Circular Scope 3
Cutting operational carbon and buying carbon offsets alone is not enough to reach Net Zero. We need to take action on material resources – the ‘stuff’ of life: how much we use, how it’s made, what it’s made of, how we use it and dispose of it. We need circular economy.
And circular economy has other benefits, too: not only in meeting our waste goals and protecting against resource shortages on a limited planet with a growing population, but also transitioning to a circular economy can bring £billions to the economy, enhancing business efficiency, and stimulating innovation, as well as helping to tackle social injustice and create a fairer society.
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Guidance | Activating Supplier Engagement of Scope 3 Emissions
To support organisations at all stages of the supplier engagement journey, Anthesis has put together a guide that provides an overview of the key elements needed to execute a successful supply chain engagement program on scope 3 emissions and activate suppliers to set SBTs. The learnings included in the guide were informed by engagements with VmWare, PayPal, Tesco, Autodesk, and other clients.
Glossary
- Life Cycle Emissions: Life cycle emissions refer to the total emissions associated with a product or service throughout its life cycle, from raw material extraction to end-of-life disposal.
- Cradle to Gate: Cradle to gate refers to the emissions generated from the extraction of raw materials to the point where a product leaves the factory gate.
- Combustion Emissions: Combustion emissions are emissions generated from the burning of fossil fuels for energy or transportation.
Case Studies
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