Scope 3 emissions reporting is an important topic and is a challenge for sustainability managers. Learn the issues around Scope 3 transparency and how they can be overcome.
Corporate action on climate change is growing. Many companies have already taken action to reduce their Scope 1 and 2 emissions. But companies are now looking to increase their climate ambition and reduce their Scope 3 emissions. For most companies, Scope 3 emissions will account for the majority of emissions produced. But what are Scope 3 emissions? How are they calculated? And what challenges arise with Scope 3 reporting?
What are Scope 3 emissions?
The GHG Protocol breaks down a company’s emissions into three ‘scopes’. Scope 1 emissions are direct emissions derived from company-owned or controlled sources. Scope 2 emissions are indirect emissions that arise from the generation of purchased energy.
In contrast, Scope 3 emissions are any emissions that originate in the corporate value chain. Scope 3 includes all indirect emissions not included in Scope 2. Value chain emissions can come from fifteen different categories of upstream and downstream emissions. Some common categories for businesses would include emissions resulting from the ‘Use of Sold Goods’, ‘Employee Commuting’ and ‘Transportation and Distribution’.
Scope 3 emissions reporting is an important topic and is a challenge for sustainability managers. Learn the issues around Scope 3 transparency and how they can be overcome.
What are the challenges in Scope 3 reporting?
Scope 3 emissions will typically account for the largest and most diverse share of company emissions. With emissions from fifteen different categories, Scope 3 reporting brings many challenges for companies.
- Lack of high-quality primary emission data: A key issue for companies reporting Scope 3 is getting high-quality primary data from their suppliers. There are a number of reasons why this issue can arise. Suppliers may not have data tracking in place, for example. In these cases, companies will rely on creating secondary data based on industry averages, environmentally-extended input-output (EEIO) data, or other methodologies. This use of secondary data will result in less accurate emissions reporting.
- Complexity and inconsistency of calculation methodologies: The Scope 3 Corporate Standard outlines different methods to calculate Scope 3 emissions. However, with companies using different methodologies…
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