What are scope 3 emissions?
The GHG Protocol Corporate Accounting and Reporting Standard, which is one of the most globally recognised standards for developing corporate-level GHG emissions inventories, categorises greenhouse gas (GHG) emissions into three different “scopes”. Scope 1 includes all direct emissions from owned or controlled sources. Scope 2 includes indirect emissions from purchased energy. Scope 3 covers all other indirect emissions within your value chain, including both upstream and downstream. In other words, scope 3 emissions are not directly produced by you but occur as a result of your interactions with other entities. Scope 3 can often be the largest part of an organisation’s total emissions, which is why reducing them is so important for reaching net zero targets. Unfortunately, companies often have limited control over them, meaning they can also be the hardest emission sources to accurately track and reduce.
Do they need reporting?
For most voluntary and regulatory reporting, scope 3 emissions are optional to report on, meaning you have the freedom to include or exclude them from your carbon footprint inventory. You may also decide to report on some scope 3 emissions, but not others and as a result, comparing scope 3 inventories among businesses does not usually offer meaningful comparisons. However, even if you wish not to publicly report them, you can still choose to measure them and understand their impact.
Why measure them?
If you do not have to include scope 3 emissions for reporting purposes, and their ability to act as a comparison tool is limited, why should you measure them? This is a question we are often asked and on the face of it, it is a good question, but there are several benefits of measuring your scope 3 emissions, which we explore below.
Stay Ahead of Legislation
While there is no obligation to measure them now, as we move towards net zero targets and regulations tighten progressively, it is likely that some or all scope 3 emissions will become mandatory to report on. Therefore, by having processes in place and already measuring your scope 3 emissions, you will be better prepared for any future changes in legislation.
While scope 1 and 2 emissions are compulsory to report on, they do not provide a complete picture of your impact, as we mentioned earlier, scope 3 can be the largest source of emissions. By measuring them you can identify emission hot spots and inefficiencies within your value chain. This can uncover potential cost reduction and operational efficiency improvements.
Collaborating with your suppliers is an important part of both measuring and reducing your scope 3 emissions. A good starting point is to identify if your suppliers are tracking their emissions and if they have a plan in place to reduce them. If they are not, you may encourage and support them to do so, or you may look to collaborate with like-minded suppliers who better match your ethos and environmental aspirations. Whichever route you take, it creates a demand for carbon transparency, and if companies around the world do this, it will send a clear signal to the market and provide added incentive for suppliers to get on board with carbon accounting. Ultimately, you will be playing a role in driving wider change that has lasting benefits for you and society.
Quite simply, going beyond minimum reporting requirements demonstrates to all stakeholders that you are aware of your full impact and that you are taking accountability for it.
Further to this, with support from the Science Based Target Initiative (SBTi), many companies are going one step further and setting ambitious targets to reduce their GHG emissions in line with the latest climate science. If you wish to follow suit and be approved by the SBTi, you must have a complete scope 3 inventory.
What do you think?
From driving climate action to staying ahead of legislation, reducing costs, and demonstrating leadership, you can see why we encourage the measurement and reporting of scope 3 emissions, but ultimately, the decision for now, is yours to choose.
The GHG Protocol identifies 15 categories of scope 3 emissions which you can read more about here.
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