De-coding Scope 3: a beginners guide to tracking down and tackling your carbon footprint
In today's climate-conscious world, businesses worldwide are taking bold steps to curb their carbon footprint. They are doing a great job at managing their direct emissions (Scope 1) and emissions from purchased energy (Scope 2). But here's the challenge that's often overlooked: Scope 3 emissions. These emissions, lurking both up and downstream in a company's value chain, hold the key to slashing a significant chunk of a company's overall greenhouse gas (GHG) emissions.
Let's put it into perspective. According to the Carbon Disclosure Project (CDP), Scope 3 emissions are responsible for a staggering 65% to 95% of a company's GHG emissions, dwarfing the contributions of Scope 1 and 2 emissions.
And in certain industries, the numbers are even more eye-popping:
??? Oil & gas: A whopping 88% of emissions belong to Scope 3
?? Financial services: Virtually all emissions (yes, nearly 100%) fall under Scope 3
?? Metals & mining: 92% of emissions are linked to Scope 3
While companies are diligently reducing Scope 1 and 2 emissions within their own operations, these actions only scratch the surface of the carbon footprint. Tackling Scope 3 emissions is crucial, but it's easier said than done. You see, these emissions are elusive. We can't always see or directly control them. It takes strategic teamwork with our supply chain partners who have the vital data we need. But that's not always a straightforward process – it can be complex and time-consuming. The success of this collaborative effort hinges on several factors: suppliers' net-zero goals, the influence of clients or buyers, and the potential for mutual benefits.
When we dive into the nitty-gritty of calculating Scope 3 emissions, three big questions pop up. First, what's the best way to calculate these emissions? Second, how do we gather the data efficiently? And third, there's the data overload. It's like trying to find a needle in a haystack when you're dealing with a myriad of data from various sources and formats. Making it tough for even the most hardened Excel pros to produce timely accurate reports.
Many companies rely on the GHG Gas Protocol's technical guidance, an internationally accepted method for managing GHG emissions in their value chains. This guidance defines 15 categories of Scope 3 emissions, offering a roadmap to measure, manage, and reduce emissions across the corporate value chain.
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When it comes to collecting the data, there are three primary approaches. Some companies use spending data to estimate their carbon footprint linked to procurement. Others turn to supplier surveys, reaching out to vendors to ask about their emissions. And if product lifecycle assessments (LCA) data is available, that's another valuable source.
The sheer volume of data involved means that it is difficult to manage this exercise manually using Excel. Most large enterprises have hundreds if not thousands of suppliers. For example, Procter & Gamble states it has over 75,000 while Total counts over 150,000[1]. ?Visibility and consistency in data sources become a real challenge.? This makes setting emission targets and tracking progress a daunting task, often leading to the frustration of not reaching net-zero emissions.?
So, here's the game-changer: a data-driven approach. This approach lets organizations capture a complete view of their value chain emissions, encompassing suppliers, customers, and other stakeholders. By using data-driven methods, organizations collect and report emissions data based on precise measurements and calculations, enhancing the accuracy and transparency of reporting.?
Gathering data at the source helps identify emission hotspots within the value chain, allowing for more effective reduction efforts and engagement with suppliers and partners to curb emissions. A data-driven approach empowers organizations to set meaningful emission reduction targets and track their progress, increasing the odds of achieving those targets.
While dealing with Scope 3 emissions may seem like a daunting task, it's encouraging to see more companies stepping up to the plate, sharing experiences, and refining data capture methods. This will eventually lead to the digitization of carbon footprints, making Scope 3 reporting much more granular and accurate.
If you are looking to kickstart your efforts in reducing Scope 3 emissions here are our top 3 tips:
1.?? Measuring the Unseen: to reach emission reduction goals, you need accurate data about your Scope 3 emissions. The GHG Protocol's Scope 3 Standard provides a framework for tracking emissions from 15 categories of activities in your supply chain. It also encourages collaborating with suppliers and customers to tackle climate impacts across the value chain.
2.?? Source Emissions Data: Work with your partners to establish processes for accurate emissions data collection. Promote reporting consistency among value chain partners and use modelling for your emission estimates when needed. A data-driven approach boosts transparency and accuracy.
3.?? Focus on the Big Players: Identify suppliers or partners that make the most significant contribution to your Scope 3 emissions. Concentrate your efforts on working with them, sharing best practices, developing sustainable plans, and using your influence as a major customer to encourage their participation.
If you would like to learn more about how Future Planet is helping companies get visibility and control of their Scope 3 emissions and implementing sustainable supply chains, please reach out to me. Together, we can drive meaningful change towards a more sustainable future.
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1 年Totally agree, the first challenge is collecting accurate data, but it will surely give us a better view of what we need to address first.