How To Streamline GHG Emission Measurement for Purchased Goods & Services

When businesses purchase goods or services, they indirectly contribute to greenhouse gas (GHG) emissions.?

Understanding and measuring these emissions is crucial for reducing environmental impact, but it's not always easy.?

At VUPICO, we understand the challenges associated with measuring emissions from purchased goods and services so in this discussion, we'll give you effective ways for streamlining GHG emission measurement for purchased goods and services.

5 Effective Steps to Streamline GHG Emission Measurement?

Reducing Scope 3 emissions from purchased goods and services is crucial for organizations aiming to achieve sustainability goals. Here's a structured approach to effectively manage and mitigate these emissions:

1. Segmenting & Prioritizing Suppliers

The first step for managing and reducing Scope 3 emissions from purchased goods and services (Scope 3.1) is by segmenting and prioritizing suppliers based on value, quantity, region, and emissions.?

As we segment suppliers based on the values of goods or services, we can identify the most significant contributors to the organization’s supply chain emissions and provide insights to their impact.?

We have to consider the geographic region of suppliers because the intensities of the emissions may vary. However, if the emissions data are directly available from the suppliers, we can indicate their contribution to the Scope 3 emissions and prioritize.?

Here's a brief discussion of the 80/20 rule:

Additionally, organizations can apply the 80/20 rule [1 ]? to their supplier segmentation, focusing efforts on the critical subset of suppliers that account for a significant portion of Scope 3 emissions from purchased goods and services.?

By identifying and prioritizing this vital 20% of suppliers, organizations can potentially achieve a substantial reduction in their overall emissions.?

2. Collect the Supplier Emission Factor with the VUPICO Supplier Data Portal.

For most organizations, collecting accurate emission factors from suppliers is crucial for calculating Scope 3 emissions. The VUPICO Supplier Data Portal will gather primary data directly from suppliers.?

In case the suppliers did not provide complete information, the gaps need to be filled with secondary sources, and to effectively do that, we have to combine primary data from the suppliers with secondary data.?

Secondary data are secondary emission factors that should be disaggregated so necessary elements will be overwritten with supplier-specific data through VUPICO Supplier Data Portal.?

Secondary data sources can be as follows:?

• Ecoinvent- a widely used life cycle inventory database?
• Intergovernmental Panel on Climate Change (IPCC) emission factors
• Country/Region based emission factors

These industry-specific and location-specific emission factors can be used to estimate the missing elements of a supplier’s emissions profile.?

As companies combine primary data collected from the Supplier Data Portal and Secondary Data Sources, they can have a more accurate picture of their Scope 3 Emissions from purchased goods and services.?

This step ensures that supplier-specific data is prioritized whenever available while leveraging established secondary sources to fill the gaps in the emission calculations.?

A company may also request Internal Data Systems, Public GHG Inventory Reports, Company or supplier-developed emission factors (Internal LCA report or GHG Inventory), Life Cycle Databases, and other Industry associations to help with the calculation.?

3. Map Actual Emission Factor Using AI Technology Connecting to Various Databases

Now that we have collected the primary data from suppliers and the supplementary secondary data sources, the next step is to map the actual emission factors using AI technology connected to various databases.?

Here’s the process:?

1. Identify Activities: Identify the specific activities involved in the supplier’s operations based on the following: sector type, technology used, and processes related to the product or materials. You can find this information from supplier data or additional research.?
2. Select Calculation Method: After identifying the activities and the required reporting standards, we have to select an appropriate calculation method to determine the specific emission factors and algorithms.?
3. Choosing Geographic Emission Source: The geographic source of the emission factors should be considered and depending on the available data and accuracy level, the emission factors can be based on global averages or country-specific data.?
4. Determining Conversion Factors: Consistency in the calculations is important so the appropriate conversion factors must be determined for calculating emissions in common units.?

With AI technology, organizations can automate this process such as identifying relevant emission factors, conversion factors, and calculation methods. The integration of databases and AI enables accurate and scalable mapping of emission factors for Scope 3.

4. Apply Specific Calculation Methods Based on the Emission Factors?

There are several calculation methods and the choice depends on the availability, quality, and desired level of accuracy of the data.?

The following calculation methods are commonly used:?

1. Supplier-Specific Product-Level Data: It is the most accurate calculation method because it uses emission data specific to the good or service purchased by the reporting company. It is the approach used by VUPICO SDP and it is recommended whenever supplier-specific data is available because it avoids the need for allocation.?
2. Hybrid Method: It is widely used when supplier-specific data is partially available and combined with secondary data sources to fill the gaps. It also produces the most accurate data while supplementing it with industry estimates or averages.?
3. Average Data: If supplier-specific data is not available, you can estimate emissions by collecting data on the mass, volume, or other relevant units of purchased goods or services and multiplying it with relevant secondary emissions factors.?
4. Spend-Based Method: Spend-based method estimates emissions based on economic value and it involves collecting data on the monetary value of purchases multiplied by the relevant monetary value of goods or services in a particular industry or sector.?

If you have all the data needed, Supplier-Specific Product-Level Data offers the most accurate calculation method. However, in situations where supplier-specific data is unavailable or limited, the hybrid, average-data, or spend-based methods can be used as alternatives but the degree of accuracy can vary.?

5. Identify & Analyze Emission Hotspots

For the last step, identifying and analyzing emission hotspots can help in understanding and addressing the most significant sources of emissions within the supply chain, but it is a critical step.?

VUPICO SDP provides powerful analytics features that enable users to quickly and correctly identify emission hotspots and even track their progress over time.?

VUPICO SDP Key Capabilities include:?

• Filter selection to analyze specific areas of interest.
• Tables for organized data viewing and comparison.
• Bar graphs for visually identifying the highest contributors.
• Line graphs for tracking emission trends over time.
• Combo charts for comprehensive data analysis.

By using VUPICO SDP, organizations can quickly pinpoint the hotspots within the supply chain,? drill down into root causes, and develop target reduction strategies.?

The final data supports comprehensive emissions reporting and disclosure. This analysis enables businesses to prioritize initiatives that will have the greatest impact on managing and tracking GHG emissions.?

Why Should Businesses Measure GHG Emission??

Businesses should measure greenhouse gas (GHG) emissions to understand their environmental impact and identify areas for improvement.?

Streamlining this process enhances efficiency, reduces costs, and ensures compliance with regulations. Moreover, it promotes transparency, which can enhance reputation and attract environmentally conscious consumers and investors.?

Key Takeaways?

VUPICO provides businesses with essential tools to streamline the measurement of Scope 3 emissions from purchased goods and services.?

By utilizing the VUPICO Supplier Data Portal and advanced AI technology, organizations can efficiently collect data, map emission factors, and pinpoint emission hotspots.?

This structured approach supports sustainability goals, enhances transparency, and enables targeted reduction strategies, ensuring businesses can effectively manage their environmental impact while meeting regulatory requirements and contributing to global sustainability efforts.

VUPICO’s approach is simple, delivering fast time to insight and even faster adaptability.

Join VUPICO in simplifying your GHG emission data collection process today! Experience the efficiency and ease of the VUPICO Supplier Data Portal. Book a demo today !

References:

1. https://www.investopedia.com/terms/1/80-20-rule.asp?
2. https://ghgprotocol.org/scope-3-calculation-guidance-2?
3. https://www.epa.gov/climateleadership/ghg-reduction-programs-strategies?