Scope 3 emissions refer to indirect emissions in a company’s value chain. Where scope 1 covers all emissions from an organization’s owned or controlled assets and scope 2 covers indirect emissions from the generation of purchased energy, GHC Scope 3 encompasses emissions generated as a result of the company’s activities but that occur from sources not owned or controlled by it.
What are scope 3 emissions?
As corporate stakeholders, including customers and employees, increasingly scrutinize ESG performance, many organizations are rising to the challenge by committing to ambitious emissions reduction targets. Over the last few years, there’s been a growing realization that reporting organizations are responsible for more emissions than the carbon emitted due to their direct operations. While most businesses report scope 1 and scope 2 emissions alone, research indicates that scope 3 emissions account for more than 70% of the carbon footprint of many businesses. This demonstrates that an organization’s climate impact stretches well beyond its scope of direct activities.
4 steps to implementing GHG scope 3
If your organization wants to implement GHG scope 3 to decrease emissions, here are 4 steps to help achieve that goal.
Step1: Assess your scope 3 emissions to determine which categories and data are most critical to your organization’s carbon footprint
Successful sustainability initiatives begin with defining emission categories and data. When it comes to establishing the boundaries for scope 3 data, many organizations often struggle to decide which emission categories and data types (suppliers) to report. The best way to solve the problem of determining boundaries for your scope 3 data is to hire consultants to conduct the “relevance test” or you could rely on knowledgeable internal staff. Doing this will help your organization discover the biggest opportunities for GHG reductions and provide insight into where and how to start engaging suppliers.
Step 2: Develop a plan for sourcing data
Now that you have developed the boundaries of your scope 3 reporting through GHC Scope 3, the next step is to develop a strategy for data collection. Organizations rely on data to set and change reporting boundaries and ensure that their GHG emissions calculations stay up-to-date as they scale.
A consultant can help determine what type of data you need (primary & secondary) and the best collection approach. In some instances, the data you need can be sourced from within the company, but at other times, you may need to engage suppliers to collect data from them. You can also leverage different reporting tools for automatic data collection from existing available systems.
Step 3: Calculate emissions for each category
Now that you have defined boundaries and developed your plan for sourcing data, it’s time to determine which emission factor and calculation is most appropriate for each supplier. The factors applicable to each category differ, primarily based on the information you have at hand. The same applies to the calculation methods. Again, an expert can be employed to carry out the calculations.
Step 4: Set targets and increase supply engagement
Using the derived emission calculation for each supplier, the next thing to do is to set targets and increase engagement with your suppliers to achieve GHG reduction. Set clear expectations for suppliers and strategically engage them to drive action. It’s important to ensure that the framework for expectations and standards is realistic and won’t overburden your suppliers. Introducing an incentive/penalty system may also help improve the implementation rate.
Every organization plays a key role in global decarbonization efforts, and more can be done by cutting down on scope 3 emissions, which constitute the bulk of several corporations’ footprints. The steps above can help your company develop actionable strategies based on your relevant data so you can make significant reductions over time.