Net Zero

What are Scope 3 emissions and why do they matter?

Discover the importance of having a Scope 3 emissions strategy, how to engage your suppliers and why it’s crucial to measure, manage, and reduce those emissions.

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Planet Mark
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In the world of sustainability, scope 1 and scope 2 emissions have long been at the top of the agenda. However, the calculation of scope 3 emissions is now a mainstream requirement that has businesses wondering where to start.  

By measuring scope 3 emissions, a company can gain a comprehensive understanding of their carbon footprint and unlock opportunities and efficiencies that enable future growth. 

What are scopes 1 and 2?

Greenhouse gas emissions (GHG) are broken down into three categories which helps to understand the source of emissions to simplify reporting: 

Scope 1 emissions occur within the company’s boundaries: are direct GHG emissions that a company generates directly from sources that it owns or controls. Examples include, from fuel combustion in company owned boilers, furnaces and vehicles, to any other emissions produced directly by the company’s operations.  

Scope 2 emissions relate to emissions that are indirectly linked to the company’s activities. They are associated with the purchase of energy such as electricity, steam, heat, or cooling by the company, and result from the generation of energy by the company through the energy production itself or not directly controlled by the company. For example, when a company buys electricity from the grid, the emissions associated with generating that electricity (e.g., from coal-fired power plants or renewable sources) fall under Scope 2.  

In reporting terms, the scopes are essential for understanding and managing a business’s environmental impact. By measuring and addressing both direct and indirect emissions, companies can work toward reducing their overall carbon footprint.  

How do scope 3 emissions fit into the picture?

Scope 3 emissions are indirect emissions that occur in the reporting company’s value chain, including those from raw material production and transportation, as well as those arising from product and service use and disposal. They are often a result of activities from assets not owned or controlled by the reporting company, but that the company indirectly impacts within its value chain. 

Why measure Scope 3 emissions

While scope 1 and 2 emissions are relatively straightforward to calculate, scope 3 emissions include a wide range of activities, which makes them more complex to measure. However, they often represent a significant portion of a company’s total GHG emissions – up to 90%. So, by measuring and managing scope 3 emissions, companies can identify areas for improvement, reduce risks, generate new supply chain opportunities, and build efficiency. 

How to calculate Scope 3 emissions 

Calculating scope 3 emissions can be a complex process due to the broad range of activities that need to be considered. These can include business travel, employee commuting, waste disposal, and the use of sold products, among others…  

How to begin? 

To start, companies need to identify and categorise their scope 3 emissions sources. At Planet Mark, we use the Greenhouse Gas Protocol (GHG), which provides a comprehensive framework for categorising these emissions into 15 distinct categories. 

Once the sources of scope 3 emissions have been identified, the data is collected, which involves gathering information from suppliers, estimating emissions based on industry averages, or using specific calculation tools. 

What are the challenges and opportunities? 

One of the main challenges in calculating scope 3 emissions is the lack of data availability. Many organisations may not have direct control over their entire supply chain, which makes it difficult to gather accurate data. However, this challenge is also an opportunity for companies to engage with their suppliers and encourage them to take steps towards reducing their own emissions. 

By identifying and addressing their scope 3 emissions, companies can not only reduce their environmental impact but also improve their operational efficiency, enhance their brand reputation, and drive innovation as well as new business opportunity. 

Engaging with your supply chain is essential not only for reducing emissions but also for fostering innovation, resilience, and long-term success. Read on to discover five steps you can take to unlock scope 3: 

1. Prioritise scope 3 emissions: 

Recognise that indirect GHG emissions from suppliers and products sold (Scope 3 emissions) often constitute the largest portion of a company’s carbon footprint. Address these emissions by collaborating with suppliers, customers, and other stakeholders to measure, monitor, and set targets for scope 3 emissions reduction. 

2. Communicate expectations clearly: 

Engage and influence suppliers by clearly communicating your expectations and requirements. Use channels such as contracts, codes of conduct, policies, letters, webinars, or workshops to convey your message. 

3. Map and segment your suppliers 

By identifying and understanding the various suppliers in your value chain, your business can effectively prioritise engagement efforts and develop targeted strategies for emission reductions.  

One approach does not fit all. A common challenge is not fully understanding the maturity, knowledge, and current activities of your suppliers. By understanding your suppliers’ capabilities, opportunities, and motivations, you will be in a much better position to set realistic and achievable goals. 

4.Incentivise suppliers:

Reward suppliers who actively contribute to emissions reduction by offering terms to suppliers who demonstrate commitment to sustainability. 

5. Capacity building and collaboration: 

Build capacity within your supply base for GHG emissions reduction. Collaborate with other companies and industry partners to share best practices and drive collective change. 

How can Planet Mark help? 

Calculating Scope 3 emissions may seem daunting, but it is a crucial step towards achieving comprehensive sustainability. By understanding and addressing these emissions, companies can unlock new opportunities, improve efficiency, and contribute to the global effort to mitigate climate change.  

Take your first step towards understanding your Scope 3 emissions today. Whether you are a small, medium or large business, our team of independent experts can help you to measure your scope 3 emissions to help you to begin to identify where to focus your reduction efforts which is a crucial part of building a robust decarbonisation strategy. 

Click here to learn about how the Planet Mark Business Certification can help your company get a fuller understanding of their value chain emissions by measuring more of your Scope 3 emissions. 

 

Join our Scope 3 masterclass series to navigate indirect emissions and engage your supply chain effectively.
How to measure and reduce Scope 3 emissions

Wednesday 7th August 2024, 12:00pm - 1:00pm