Measuring Scope 3 emissions in your supply chain can be daunting. These emissions are indirect, making it difficult to assess the embedded carbon of purchased goods and services without primary data. Many companies therefore rely on spend-based emissions calculations that use complex lifecycle analysis to estimate industry-wide carbon intensity, the validity of which can be difficult to assess for those not well versed in climate science.
Despite these challenges, calculating Scope 3 emissions is crucial for businesses of all sizes. Legislation is evolving rapidly. The EU’s Corporate Sustainability Reporting Directive (CSRD) now mandates Scope 3 reporting for companies – the first in history to do so – and the UK is likely to follow suit, given its commitment to aligning with EU climate and sustainability policy post-Brexit. However, as many will know, legislation will only cover larger companies – for example, CSRD only applies to companies with turnover of more than EUR 50 million and more than 250 employees.
Nevertheless, smaller companies outside the scope of this legislation face equal, if not greater, challenges. Large companies are increasingly seeking to measure and reduce their own scope 3 emissions, i.e. the emissions of any company supplying them. By engaging with suppliers directly, these large companies can gather emissions data and identify opportunities for collaborative emissions reduction. This not only helps them meet their own sustainability goals, but also enables them to select suppliers with lower carbon footprints.
Stakeholders in the supply chain who fail to measure emissions – including scope 3 emissions – may find themselves at a competitive disadvantage.
Why do companies measuring their own scope 3 emissions need my scope 3 emissions?
Scope 3 emissions, usually the largest category for businesses, encompass the entire supply chain, from “cradle to gate”. This includes emissions from raw material extraction (“cradle”), processing, and transportation, until the purchased good arrives at your company’s facility (“gate”).
Interestingly, this means that many of your Scope 3 emissions are also the Scope 3 emissions of the company to which you supply. By sharing your Scope 3 data, you’re helping your suppliers accurately calculate their total carbon footprint. Remember, you are part of their supply chain, and your emissions contribute to their overall environmental impact.
Therefore, as suppliers, the ability to measure and report Scope 3 emissions will be crucial to maintaining a competitive edge.
Why companies are engaging their supply chain
As businesses become increasingly focused on sustainability, engaging with their supply chain has become a critical strategy for reducing Scope 3 emissions. By gaining greater visibility into supplier emissions, companies can more accurately calculate their overall carbon footprint. This data is essential for tracking and reducing Scope 3 emissions effectively.
Furthermore, carbon footprint data can help companies select suppliers with lower emissions, contributing to their own sustainability goals. Engaging with suppliers also provides opportunities for collaborative efforts to reduce emissions throughout the supply chain. By working together, companies can develop more sustainable practices and drive collective progress towards a lower-carbon economy.
Basic first steps for measuring scope 3 emissions
If you’re new to measuring your Scope 3 emissions, a spend-based approach is a great place to start. While not the most precise, it offers a valuable baseline for companies taking their first steps towards emissions measurement. Remember, every journey begins with a single step, and measuring your emissions, even in a basic way, positions you for continuous improvement and more accurate calculations in the future.
The spend-based approach is a robust starting point for calculating emissions from Category 1, purchased goods and services, often the largest contributor to a company’s Scope 3 footprint. Additionally, this method can be applied to most Scope 3 categories, including waste, logistics, and business travel, providing a versatile initial assessment.
To calculate emissions using a spend-based approach, you’ll need a reliable database of emissions factors. Exiobase is a leading environmentally extended input-output (EEIO) table that provides comprehensive data on climate impacts across industries and regions. However, if you are not well versed in lifecycle analysis, accessing its full capabilities may require a fee. Small World Consulting offers a free version of their EEIO table and spend-based emission factors, making it a great starting point for companies new to Scope 3 measurement.
As you measure, you’ll gain insights into the specific data needed to refine your emissions calculations beyond the spend-based approach. For instance, tracking business travel distance and modes instead of just category expenditure can provide more accurate emissions data. Collaborating with waste providers to measure waste type, mass, and routes can also enhance accuracy. Similarly, requesting detailed tonne-kilometre reports from logistics providers can improve the precision of upstream transportation and distribution calculations.
Depending on your size, you may have access to an Enterprise Resource Management (ERM) system which can be an extremely useful tool for improving data collection and emissions calculations accuracy. By centralising and standardising data across departments, ERM systems can provide a comprehensive view of a company’s operations, making it easier to identify and track relevant emissions data. ERM systems can integrate with emissions calculation tools, automating data transfer and reducing the risk of errors. By understanding your current systems and the data held within them, you can set out a path to improved Scope 3 emissions data over time.
In conclusion
Measuring and monitoring Scope 3 emissions is becoming increasingly important for businesses of all sizes. You may be asked to provide relevant inputs to help a larger supplier compute their own Scope 3, or you may want to pro-actively undertake this analysis to improve your competitive advantage. Whatever is driving your need to calculate Scope 3, the techniques above can help you identify your first reporting steps and how to improve reporting accuracy and efficiency over time.
Are you looking to begin your journey into scope 3 emissions measurements? Feel free to reach out at info@cityscience.com if you need help!