Measuring scope 3 emissions can be a tricky task. In some instances, they can be mandatory requirements, such as in the EU and California under CSRD and within the UK’s ISSB standards.
The good news is that there are significant upsides to measuring the indirect emissions within your value chain. Without reporting your Scope 3 emissions, it’s impossible to get a true measure of the impact your carbon footprint.
What are Scope 3 emissions?
Scope 3 emissions are defined as “all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions”.
This means that they are generated by other businesses connected with yours, such as, suppliers, distributors, end users, franchisees, waste disposal etc.
Upstream emissions are produced by third parties that source, produce, and transport any raw materials and components that your organization uses. They also include business travel, employee commuting, leased assets and waste generated in operations. The full list includes:
- Purchased goods and services
- Capital goods
- Fuel and energy-related activities
- Upstream transportation & distribution
- Waste generated in operations
- Business travel
- Employee commuting
- Upstream leased assets
Downstream emissions include the transportation and distribution of activities or products leaving your premises. This includes:
- Processing of sold products
- Use of sold products
- End-of-life treatment of sold products
- Downstream leased assets
- Franchises
- Investments
Why should companies measure their Scope 3 emissions?
Scope 3 emissions can often be responsible for bulk of a company’s total emissions. This makes them a perfect area to focus on, as reducing them can have a significant impact toward your organization's sustainability goals.
What’s more, reporting Scope 3 emissions is a requirement of the Science Based Target initiative’s (SBTi) Net Zero standard.
As part of the SBTi’s Net Zero Standard framework, organizations pledge to halve emissions by 2030 and work toward to zero emissions by 2050. To achieve this, it requires near-term and long-term targets to be set. Both may require a significant reduction on Scope 3 emissions.
According to the SBTi, if Scope 3 emissions total over 40% of your overall emissions (scope 1, 2 and 3), you must set Scope 3 near-term targets that collectively cover at least 67% of Scope 3 emissions. Near-term science-based targets must be met within a 5- to 10-year period.
Long-term science-based targets must be met by 2050 or sooner. They cover 95% of Scope 1 and 2 emissions as well as 95% of Scope 3 emissions. A company is considered to have achieved net zero when it meets its long-term target.
What are the key benefits to businesses?
When you start to report Scope 3 emissions you don’t just begin to meet your regulatory requirements, you open the door to some significant business opportunities.
Measuring your Scope 3 emissions effectively means undertaking a thorough evaluation of your entire value chain. This provides you with valuable information and deep insights about all areas from your suppliers right through to staff business trips.
Once you have these insights, you can start to analyse them and identify potential opportunities for improvement. The benefits can range from meeting your climate targets by reducing emissions to cutting unnecessary waste or costs.
The process of reporting on Scope 3 emissions has more benefits. You will be engaging directly with your suppliers and stakeholders. Opening this dialogue can lead to conversations about how to improve working relationships and how to collaborate more effectively.
If you choose to ignore Scope 3 emissions and just undertake your current requirements, you are potentially leaving yourself open to future reputational damage. This risk is heightened if any of your competitors are measuring and reporting their Scope 3 emissions.
How can my organization measure its Scope 3 emissions?
Although measuring Scope 3 emissions can be a time and resource-heavy process, the range of benefits are clear.
Our solutions make calculating your emissions so much easier. You can save time from using the efficient bulk data upload option and automatic calculations from our extensive emission factors database adds a foundation of transparency.
Plus, you’ll have access to your own sustainability expert to help support you every step of the way! Start your decarbonization and sustainability journey with a solution you can trust.