Scope 3 encompasses emissions that are not produced by the company itself, and not the result of activities from assets owned or controlled by them, but by those that it’s indirectly responsible for, up and down its value chain. An example of this is when we buy, use and dispose of products from suppliers.
According to Deloitte, “For many businesses, Scope 3 emissions account for more than 70% of their carbon footprint. For example, for an organisation that manufactures products, there will often be significant carbon emissions from the extraction, manufacture and processing of the raw materials.” (ref) It is therefore critically important for organisations to understand and reduce Scope 3 emissions when adressing Net Zero targets.
The starting point to understanding scope 3 emissions is the GHG Protocol Corporate Value Chain Accounting and Reporting Standard (referred to as the Scope 3 Standard). This offers an internationally accepted method to enable GHG management of companies’ value chains. This is simplified into the “technical guidance for calculating scope 3 emissions”.
This guidance document serves as a companion to the Scope 3 Standard to offer companies practical guidance on calculating their scope 3 emissions. It provides information not contained in the Scope 3 Standard, such as methods for calculating GHG emissions for each of the 15 scope 3 categories, data sources, and worked examples.
It recommends estimating your scope 3 emissions at the outset in order for companies to be able to identify where the key areas in terms of scale and also opportunities for reducing emissions. It also highlights areas which are considered important by your customers as well as your business goals.
It is important to note that there are two types of data that can be used to calculate data. The first is primary data, which is data provided by suppliers or others that directly relate to specific activities in the reporting company’s value chain. The second is secondary data. This is includes industry-average-data (e.g., from published databases, government statistics, literature studies, and industry associations), financial data, proxy data, and other generic data. In certain cases, companies may use specific data from one activity in the value chain to estimate emissions for another activity in the value chain. The GHG Protocol website has a more comprehensive list of secondary data sources at: http://www.ghgprotocol.org/Third-Party-Databases.
If you would like advice on looking into your scope 3 emission analysis, please do not hesitate to contact us.