Net Zero

Scope 3 carbon footprint guidelines

Calculating Scope 3 emissions is no longer seen as something that leading/ambitious companies do, but instead has become something standard that investors look for. Measuring your value chain emissions provides a number of benefits. This blog looks at the benefits of Scope 3 carbon footprinting and how Planet Mark can help.

Words:
Karl Hsu, Sustainability Consultant and Leonardo Fagundes, Data Analyst
Images:
Scope 3 carbon footprint emissions
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What are Scope 3 emissions?

Operational company emissions can be categorised into three scopes – Scope 1, Scope 2, and Scope 3. 

Scope 1 emissions are direct emissions from operations due to owned or controlled site and vehicle fuel consumption. Scope 2 emissions are indirect emissions from the generation of purchased electricity and steam.

Scope 3 includes all other indirect sources of emissions that are within a company’s value chain. Scope 3 emissions often represent the greatest proportion of a company’s carbon footprint, and sometimes up to 90% of total emissions. 

Achieving net zero carbon emissions means measuring your Scope 1, 2, and 3 emissions, reducing Scopes 1 and 2 emissions to zero, and Scope 3 by a minimum of 50%, and balancing any residual Scope 3 emissions using accredited carbon removal schemes. You can read more about the difference between net zero and carbon neutral here. 

The Science Based Targets initiative (SBTi) new Net Zero Standard was issued in October. The Standard, which is the world’s first standard for corporate net zero emissions, provides guidance and tools companies need in order to set science based net zero targets.

 

Scope 3 following Planet Mark certification

Planet Mark certification is used as a starting point for companies to measure their carbon footprint. It covers Scope 1, Scope 2, and a few Scope 3 categories (purchased goods and services (paper only), fuel and energy related activities (transport & distribution emissions of electricity and water), waste, and business travel). 

Following the completion of the Planet Mark certification companies can get a full understanding of their value chain emissions by measuring the majority of their Scope 3 emissions. Once a project has been signed off, Planet Mark will help with a Scope 3 screening in order to identify the categories that are relevant and might account for the largest proportion of emissions, then conduct the carbon footprint measurement. 

 

Why measure your Scope 3 emissions?

Calculating Scope 3 emissions is no longer seen as something that leading, ambitious companies do, but instead has become something standard that investors look for (as Scopes 1 and 2 were just a few years ago). Measuring your value chain emissions provides a number of benefits by allowing organisations to: 

  • View the greatest contributors and areas of their carbon footprint to focus emission reduction efforts 
  • Identify the suppliers that contribute the most to purchased goods and services and upstream transport emissions 
  • Identify areas of the supply chain that would benefit the most from emission reduction opportunities 
  • Be able to develop and apply guidelines for choosing suppliers based on their carbon emissions 
  • Reduce the emissions of operational and product emissions 

Scope 3 breakdown

Source: GHG Protocol
Upstream Scope 3 emissionsDownstream Scope 3 emissions
1. Purchased goods and services9. Downstream transportation and distribution
2. Capital goods10. Processing of sold products
3. Fuel and energy related activities11. Use of sold products
4. Upstream transportation and distribution12. End-of-life treatment of sold products
5. Waste generated in operations13. Downstream leased assets
6. Business travel14. Franchises
7. Employee commuting15. Investments
8. Upstream leased assets

1. Purchased goods and services

This category covers the emissions of all purchased goods (e.g. raw materials for production or office related items) and services from a company’s suppliers. 

Ideally, a company would have a collection of all of their purchased materials (costs, amounts, and weights) and/or items (costs and amounts) and services (costs). A variety of methods can be used to calculate the emissions depending on the data available. 

2. Capital goods

Capital goods refers to the emissions from the production of capital goods (large equipment or final products) purchased that would be used over multiple years that isn’t already included in purchased goods and services. Emissions from the use of capital goods are accounted for in Scope 1 and/or Scope 2. 

Emissions would be determined by the cradle-to-gate footprint of the product, either directly from the supplier or by using an average (e.g. industry average or spend-based average). 

3. Fuel and energy related activities

This category captures the upstream proportion of emissions of the energy sources included in Scopes 1 and 2. This includes the ‘well-to-tank’ (WTT) emissions of all fuels and the ‘transportation and distribution’ (T&D) proportion of electricity. 

4.  Upstream transportation and distribution

Emissions from the transportation of purchased materials/products (from category 1) between the suppliers and reporting company by vehicles not owned or operated by the reporting company. 

Emissions can be calculated based on the direct fuel consumed from the shipment, or distance related information (transport mode, distance of one journey between the supplier and reporting company, and the total weight transported). 

5. Waste generated in operations

Emissions arising from third party disposal and treatment of waste produced (solid waste and wastewater) as a result of the reporting company’s operations. 

Emission can be calculated from direct emissions from the waste treatment companies, or by using waste data from the reporting company (total weight of each waste type produced). 

6. Business travel

Emissions resulting from the transportation of employees for business-related activities using third-party owned vehicles (for example flights, trains, buses, taxis). 

Emissions can be calculated either using direct fuel consumption, or using distance related information such as the transport mode and total distance traveled. 

7. Employee commuting

Emissions resulting from employee commuting from their homes to the reporting company’s managed sites. 

Similar to business travel, emissions can be calculated either using direct fuel consumption, or using distance related information such as the transport mode and total distance traveled. 

8. Upstream leased assets

Emissions arising from the use/operation of assets leased by the reporting company during the reporting period that aren’t already included in Scope 1 and/or Scope 2. This category only relates to companies that operate leased assets. Assets that are leased out by the reporting company to others is included in category 13 (downstream leased assets). 

Emissions can be calculated using asset-specific fuel consumption data, or by allocating the emissions from the lessor to the relevant assets. 

9. Downstream transportation and distribution

Emissions resulting from the transportation of finished products sold by the reporting company using vehicles owned/controlled by a third party. 

Similar to upstream transportation and distribution, emissions can be calculated based on the direct fuel consumed from the shipment, or distance related information (transport mode, distance of one journey between the reporting company and the customer, and the total weight transported). 

10. Processing of sold products

Emissions occurring in the further processing of sold intermediate products by third parties. For example, a microchip manufacturer reporting its emissions would include the emissions of the computer on which it’s chips will be included. 

Emissions can be calculated directly by using the energy consumed in the processing and the amount of waste generated, or indirectly by using average secondary data (for example average emissions per product). 

11. Use of sold products

Emissions occurred from the energy consumption of sold products during the reporting year. 

Emissions are calculated by using the energy consumed by a sold product throughout its use in the reporting period. 

12. End of life treatment of sold products

Includes the emissions incurred as the result of the disposal and treatment of sold products at the end of their life. 

Emissions can be calculated using the total mass of sold products and packaging from the point of sale by the reporting company to its disposal at its end of life. 

13. Downstream leased assets

Emissions resulting from the use of assets owned by the reporting company that are leased out during the reporting period that aren’t already included in Scope 1 and/or Scope 2. 

Operational information is required to calculate emissions for this category. For example, all fuel and electricity consumed by the asset during the reporting period. 

14. Franchises

Emissions from the operation of franchises during the reporting period apportioned to the reporting company by its percentage of ownership. 

Emissions can be calculated directly using the Scopes 1 and 2 emissions from the franchise, or indirectly by estimating the emissions of the franchise based on average statistics.

15. Investments

Emissions resulting from investments made by the reporting company during the reporting period apportioned by its percentage of ownership. 

Similar to franchises, emissions can be calculated directly using the Scope 1 and 2 emissions from the franchise, or indirectly by estimating the emissions of the franchise based on average statistics. 

How Planet Mark can help

This critical period between 2020 and 2030, the Decade of Action, requires bold and ambitious commitments to tackle the climate crisis, and that means shifting to net zero carbon. No matter what stage in your net zero journey you are on, from committing to a target to creating the action plan needed to get there, we’re here to support you.

You can view an overview of our Zero Carbon Solutions here.

The team at Planet Mark are here to help, so please do get in touch if you would like any guidance from our sustainability consultants in relation to achieving your own net zero plans and targets. Email us at: info@planetmark.com