Scope 3 Emissions: 10 Myths Debunked

In our last newsletter, we delved into the intricacies of Scope 3 emissions. Today's edition shifts focus to the misconceptions surrounding these emissions.

Scope 3 emissions, typically making up the majority of a company's total carbon footprint, are pivotal to gauging climate-related risks and opportunities, and crucial in formulating effective carbon reduction strategies for decarbonization goals.

Given that Scope 3 emissions are indirect, grasping the boundaries and quantifying these emissions can pose complexities and often lead to confusion. Despite these challenges, Scope 3 emissions constitute nearly 70% of many businesses' carbon footprints, underscoring the need for businesses to avoid falling prey to common misconceptions about value chain emissions.

In this piece, we aim to debunk ten prevalent myths about Scope 3 emissions, assisting businesses on their journey to a seamless transition towards net-zero operations.

Myth # 1: Reporting scope 1 and 2 emissions is good enough

The GHG Protocol?delineates three scopes of emissions to categorize the different types of emissions generated by a company, both within its own operations and across its broader value chain. Scope 3 specifically covers emissions that occur beyond a company's direct operations - encompassing everything from procured goods to the disposal of its sold products.

By focusing solely on Scope 1 and 2 emissions, many businesses fail to account for over 70% of their emissions. As such, neglecting Scope 3 emissions can lead to a partial, and potentially misleading, representation of a company's total carbon footprint. It restricts their ability to fully evaluate climate-related risks and opportunities along the value chain.

Moreover, the absence of Scope 3 emission measurements poses difficulties when comparing the sustainability impact of various manufacturers within the same industry, particularly without supply chain insights. For instance, differentiating an electric vehicle manufacturer from a traditional car manufacturer, or comprehending the full spectrum of transition risks, becomes impracticable without such information.

Myth # 2: Scope 3 emissions are less important because the reporting company doesn't control those assets

Businesses frequently cite the categorization of emissions into scopes as a rationale for sidestepping accountability for indirect emissions. Scope 3 emissions, not falling under a company's direct control and ownership, are often seen as more arduous to gather, validate, and arrange, leading businesses to concentrate exclusively on direct emissions. As Scope 3 emission reporting remains optional across many industries, corporate value chain emissions seem to command less attention at present, though such challenges do not diminish their relevance.

However, it's important to highlight that sectors primarily governed by Scope 1 and 2 emissions form a minor part of the economy. In fact, the bulk of the economic sectors are dominated by Scope 3 emissions, indicating that for these areas, indirect emissions hold equal, if not greater, importance than direct emissions.

Myth # 3: Calculating and measuring scope 3 emissions is challenging, unaffordable, and no one knows how to do it

There's a prevailing belief among businesses that measuring Scope 3 emissions is challenging due to the perceived reluctance of others in the value chain to share information. Coupled with the historically high costs of carbon accounting agencies and consultancies, this led to a reticence to account for Scope 3 emissions.

Contrary to this belief, modern advancements have debunked this myth. Businesses can now leverage emissions management software to quantify Scope 3 emissions, much like they do with Scope 1 and 2 emissions.

In the era of carbon management software, collecting raw data and converting it into greenhouse gas emissions (expressed as tonnes of CO2 equivalent, or tCO2e) is now a breeze. What was once an arduous, costly, and time-consuming task can now be achieved in mere seconds. With a platform like Net0, you can simply upload your bills and invoices for automatic data extraction or opt for manual entry if you prefer. The system also offers ready-made integrations, enhancing your workflow while automatically collecting and converting third-party data.

Myth # 4: Businesses across the value chain aren't keen on sharing their data

According to Gold Standard reports, a supplier's likelihood of responding to the CDP increases significantly with more companies requesting their report. Specifically, there's a 68% response rate when two companies request it, which jumps to 76% with three requests. However, remember that the value chain extends beyond just suppliers. Collaborating with more transparent, like-minded organisations increases the chances of obtaining the necessary data. If these organisations are reporting their Scope 1 and 2 emissions, your Scope 3 emissions from that department can be accounted for, eliminating the risk of double counting.

Contrary to common belief, maintaining transparency is now an essential aspect of market competitiveness, and adherence to ESG criteria is a requirement for many investors. In fact, statistics demonstrate that value chains thriving in the sustainable economy are proactive in providing this data.

Net0 is a platform designed to encourage participation from colleagues throughout the supply chain, ensuring comprehensive data entry for all emission scopes. It takes a step further by automatically itemising and categorising each element of upstream and downstream emissions on the report, providing a granular and comprehensive view of your company's carbon footprint.

Myth # 5: Scope 3 reporting should be postponed until more data is available

Delaying the disclosure of your emissions data could risk atmospheric harm and impair your company's reputation due to unawareness of your carbon footprint. You can ascertain this data from your company's invoices, bills, and other relevant sources. It's worth noting that even partial data at present outweighs the absence of any data. Contrary to common belief, postponing data reporting complicates the formulation of a?net zero?strategy.

Utilizing Net0's robust carbon accounting platform transforms raw data into actionable insights. Upon input, it seamlessly translates data into metric tonnes of carbon dioxide equivalent (tCO2e), offering real-time calculation, measurement, tracking, and analysis of emissions. Net0 is more than just a platform; it's a comprehensive emissions management solution. When you successfully offset emissions, you earn tangible recognition through certificates and badges of carbon neutrality, all conveniently hosted on our platform. Furthermore, leverage our advanced simulation tool and in-depth analyses to strategically plan your carbon reduction initiatives.

Myth # 6: Same-size companies in the same industries have the same scope 3 emissions

Apple and Samsung Electronics serve as ideal examples illustrating that competitors do not inherently share identical Scope 3 emissions.

Apple, for instance, has achieved carbon neutrality. Their emissions profile is shaped by their selection of manufacturing materials, shipping methods, product usage (such as iPhone chargers), and the end-of-life process for their products. Notably, Apple employs Daisy and Dave, "robots explicitly designed for disassembling iPhones into their constituent parts", further mitigating their emissions.

Contrastingly, Samsung is striving to enhance their eco-friendliness by 2025 through various initiatives. These include adopting plastic-free packaging, using more recycled materials in manufacturing, cutting down on standby power consumption of phone chargers, and aiming for zero waste to landfills. However, their specific timeline for achieving carbon neutrality remains undisclosed.

Hence, this illustrates that the notion of competitors sharing similar Scope 3 emissions is a myth. Variations in supply chain strategies inevitably lead to different emission profiles, including those of Scope 3.

Myth # 7: Technology cannot help reduce carbon emissions

Technology plays a pivotal role as the quantifiable compass guiding carbon reduction strategies. It facilitates the scaling of strategies via benchmark establishment and target setting. Without it, one could expect to expend five times the financial resources and a significant amount of time engaging carbon consulting agencies to identify suitable offset partners.

Relying on such agencies to craft carbon reduction strategies implies you wouldn't have immediate access to your data. The process of setting benchmarks and targets would also be significantly protracted, as opposed to the instantaneous setting enabled by platforms such as Net0.

Net0's carbon management platform stands as an optimal choice for executing your emission strategies and yielding measurable outcomes. The ease of setting benchmarks and targets within Net0's system propels the efficiency and effectiveness of your carbon reduction efforts.

Myth # 8: Calculating scope 3 emissions promotes double and triple counting?

Double accounting refers to the scenario where two entities lay claim to the same carbon removal or reduction credit. It can arise when multiple sources within a single supply chain account for the same emissions, primarily due to the interweaving of different products within that chain. For instance, an upstream entity's Scope 1 emissions would be the reporting company's Scope 3 emissions. In essence, two companies, particularly those in different countries, should refrain from taking credit for the same climate mitigation action.

While such instances are relatively rare, emissions management platforms like Net0 further minimize this risk. With Net0, companies are not required to engage directly with voluntary trading programs as the platform can automatically offset emissions with any verified projects available within its system. As emissions and offsets are reported, they are itemized on GHG Protocol-compliant reports, facilitating straightforward tracking of Scope 3 emissions that have been both accounted for and offset.

Myth # 9: There is no ROI on reporting scope 3 emissions

Conveying your net zero endeavors is essential for stakeholders, ranging from investors requiring ESG criteria to eco-conscious consumers increasingly shunning pollutant brands. With the economy shifting towards more sustainable practices, neglecting to transition accordingly could be detrimental to your business in the long run, potentially hampering your progress.

Many investors now hesitate to engage with businesses that lack transparent carbon emission measurements or don't actively pursue any Sustainable Development Goals (SDGs). As a testament to this trend, impact investing has witnessed a notable increase of 25.9% over the past three years, amounting to a substantial $636 billion. End users of your products or services are more likely to remain loyal to companies that are striving for carbon neutrality. Indeed, 78% of Americans surveyed stated a preference for environmentally friendly products when available. However, 20% expressed skepticism about companies' eco-conscious claims. Therefore, companies that prioritize eco-friendly practices, particularly those aiming for carbon neutrality, offer a value-added attribute increasingly seen as a necessity.

This is where Net0 steps in, offering a public dashboard accessible to anyone given the link by the reporting company. This transparency allows stakeholders to track the progress of your net zero journey, while providing concrete proof to substantiate your company's claims.

Myth # 10: The business will not look eco-friendly if we record more emissions than our competitors

As the movement towards carbon neutrality gains momentum, transparency bolstered by robust data to validate claims of carbon neutrality is increasingly valued by stakeholders. Therefore, the more comprehensive the raw data you share, the better. Nevertheless, your actions towards emission reduction should align with your long-term reduction strategies.

When mindful consumers review your efforts and acknowledge the milestones achieved on your journey towards net zero, your progress won't go unnoticed. Additionally, by documenting all your emissions, you can assess your carbon footprint in a way that enables the identification of risks and opportunities. This wealth of data is translated into actionable insights in Net0's platform, which helps pinpoint where emission reductions can and should be made, thus informing key decisions.

These decisions may involve sourcing new suppliers, retrofitting buildings or upgrading machinery for greater environmental efficiency, adjusting the raw materials used in production or modifying the production process, enhancing the environmental footprint of the end product or its lifecycle, embracing the circular supply chain, among other possibilities. The primary contributors will become evident as you continue your journey towards net zero. With a flexible strategy in place, you can enhance your business and steadily reduce emissions in a manner that is both environmentally sound and financially viable, facilitating a smooth transition into the green economy.

In summary

Now that we've dispelled the fog around reporting your Scope 3 emissions and debunked some myths, you're well-positioned to develop and propel your net zero strategy. The advantages of taking this path are both considerable and manifold: not only are you making a tangible contribution to environmental preservation, but you're also solidifying loyalty among socially conscious consumers, and establishing an impressive ESG portfolio to present to discerning investors.

It's precisely here that Net0 can be a game changer. Our platform seamlessly streamlines the process of emission tracking, offering real-time data analysis to help you make informed and impactful decisions. With Net0, you're not just investing in a tool, but partnering with a solution that propels your business into a sustainable future.

Leverage Net0's user-friendly interface and advanced features to stay ahead in the net zero transition. Let's make your net zero journey not just a strategic objective, but an attainable reality that reinforces your market standing while contributing positively to our planet's future. Embrace Net0, embrace sustainability.

Book a demo?with Net0 today and talk to an expert about how the platform will transform the way your company manages their carbon emissions.?

The original article appeared on the Net0 Blog.