Scope 3 Emissions

Scope 3 emissions are indirect greenhouse gas (GHG) emissions that occur within an organization’s value chain, excluding direct emissions (Scope 1 emissions) and indirect emissions from energy consumption (Scope 2 emissions).  In most organizations, Scope 3 emissions make up the largest portion of their carbon footprint, accounting for up to 70% of total emissions. Therefore, measuring and managing these emissions is essential for achieving significant environmental impact reduction.

Categories of Scope 3 emissions‍

Scope 3 emissions cover a wide range of activities classified into 15 categories according to the Greenhouse Gas Protocol (GHG Protocol). These are divided into two main groups:

Upstream activities

• Purchased goods and services: Emissions associated with the production and transportation of raw materials, intermediate products, and services acquired by the company.
• Capital goods: Emissions generated during the manufacturing and transportation of capital goods, such as machinery and equipment.
• Fuel- and energy-related activities: Emissions from the extraction, production, and transportation of fuels and energy used by suppliers.
• Upstream transportation and distribution: Emissions produced by transporting raw materials and products to the company’s facilities.
• Business travel: Emissions generated by employee travel for work purposes, including flights, trains, and rental cars.
• Use of sold products: Emissions associated with the use of products sold by the company, such as gasoline consumed in a vehicle.
• End-of-life treatment of sold products: Emissions generated during the processing and disposal of products at the end of their lifecycle.
• Leased assets: Emissions from the use of assets leased by the company.
• Franchises: Emissions generated by franchise operations.

Downstream activities

• Downstream transportation and distribution: Emissions produced by transporting products from the company’s facilities to customers.
• Processing of sold products: Emissions generated during the processing of products sold by the company by its customers.
• Use of sold products: Emissions associated with the use of products sold by the company, such as electricity consumed by an appliance.
• End-of-life treatment of sold products: Emissions generated during the processing and disposal of products at the end of their lifecycle.
• Leased assets: Emissions from the use of assets leased to third parties.
• Investments: Emissions associated with the company’s investments.

Benefits of addressing Scope 3 emissions

• Identifying reduction opportunities: Measuring Scope 3 emissions helps identify key sources of indirect emissions and the areas where the most effective reduction measures can be applied.
• Improving efficiency in the value chain: Collaborating with suppliers and customers to reduce emissions can improve efficiency throughout the value chain, leading to cost savings and environmental benefits.
• Strengthening corporate reputation: Companies committed to reducing their carbon footprint, including Scope 3 emissions, enhance their image and reputation among consumers, investors, and stakeholders.
• Complying with regulations and standards: Increasingly, international regulations and standards require companies to measure and manage their Scope 3 emissions.

Challenges in measuring Scope 3 emissions‍

Measuring Scope 3 emissions presents specific challenges due to the complexity and dispersion of emission sources. Key challenges include:

• Data availability: Obtaining accurate and complete data from suppliers and customers can be difficult.
• Supply chain complexity: Global supply chains can be highly complex, making it challenging to track emissions at all stages.
• Calculation methodologies: Selecting the appropriate calculation methodology for each emission category can be challenging.

Strategies for reducing Scope 3 emissions‍

Despite the challenges, companies can implement various strategies to reduce their Scope 3 emissions, including:

• Collaboration with suppliers: Working with suppliers to implement energy efficiency measures and emission reductions in their operations.
• Sustainable product design: Designing products that are more resource-efficient and generate fewer emissions over their lifecycle.
• Transport optimization: Optimizing transport routes and using more efficient transport modes.
• Promoting remote work and sustainable mobility: Implementing policies that encourage telecommuting and sustainable transport options for business travel.
• Customer engagement: Raising customer awareness about the environmental impact of products and promoting responsible consumption.