Demystifying Greenhouse Gas Emissions: The Importance of Scope 3 for Businesses

Jargon should never get in the way of understanding and action. Unfortunately, we’ve wrapped the whole world of carbon reduction up in a language that makes it pretty impenetrable if you’re on the outside looking in. So, if you’ve ever wondered ‘what the heck are Scope 3 emissions?’ (you are not alone), or even if you haven’t, here’s a quick low down from our resident climate experts that may help you take your business’ first step on the journey to Net Zero... 
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Breaking Down the Scopes 1 2 and 3 emissions: Direct and Indirect Emissions Explained

For measuring and reporting purposes, three ‘scopes’ are used to classify the greenhouse gas emissions of a business, its suppliers and its customers, following the GHG Protocol: 

Scope 1 emissions are those that arise from the business burning fuel directly – in boilers or company vehicles, for example. A business has more direct control over these.

Scope 2 emissions are those that it causes indirectly from purchased electricity or energy - that it uses to power its buildings, for example.

Scope 3 emissions are all other indirect emissions. They are the emissions that occur as a result of a business’ operations, but are not produced by the business itself. So, they occur across its value chain, embedded in the choices made by key stakeholders like suppliers, employees and customers that enable the business to operate. Most Scope 3 emissions come from primary suppliers, but scope 3 emissions also include things like employee commuting, business travel and how customers use and dispose of a product.

Why Scope 3 Emissions Matter More Than You Think

Businesses typically have less control over Scope 3 emissions, making them more difficult to measure and to address. Yet they make up more than 70% of most businesses’ total emissions. Long and complex value chains increase the amount of data required to understand Scope 3 emissions and the more stakeholders, suppliers and consumers, the greater that complexity. 

Some Scope 3 emissions, such as employee commuting or business hotel stays, can be captured relatively easily, through surveys, for example. And as more businesses are beginning to measure and report on their carbon emissions, data is increasingly available to businesses looking to understand the impact of their supply chains. For example, suppliers are being increasingly asked about the footprint of their services and/or products, and so are incentivised to measure and provide this information in order to retain customers.

The Challenges of Measuring and Addressing Scope 3 Emissions

The latter does not come without problems, however. Different data collection processes and measurement standards mean that data is often inconsistent, missing, and difficult to compare. This requires businesses attempting to calculate their scope 3 emissions reliably to work with stakeholders to establish data-sharing partnerships, from which both can benefit. And further difficulties can be presented in determining which activities to include and how to allocate emissions accurately, since grey areas can generate double counting, where multiple parties account for the same emissions. 

Strategies for Managing Scope 3 Emissions: Insights from Climate Experts

Harry Llewellyn, Climate Research Manager at Net Zero Now, said: “It’s fair to say that measuring and accounting for all Scope 3 emissions is challenging for most businesses. But getting on top of this process is absolutely crucial for overall emissions reductions, because they make up the lion’s share of all business emissions. 

“It’s essential for businesses to understand emissions across their whole value chain so that they know where to prioritise action for maximum impact. Reducing Scope 3 emissions can often only be achieved by increasing collaboration and engagement with suppliers, customers, and other stakeholders to encourage collective efforts to reduce emissions throughout the value chain. 

Taking Action on Scope 3: How Net Zero Now Can Help Your Business

“This requires significant investment of time, resources, and expertise, and these financial and logistical constraints may limit the ability of smaller companies to accurately measure their scope 3 emissions. But there are plenty of organisations, like Net Zero Now, that exist to help small businesses navigate some of these hurdles and to cut through some of the jargon that simply turns people off. Those businesses that do put in the effort, and use standardised ways of accounting, like those we’ve developed with industry leaders, to help them move credibly towards net zero are increasingly being rewarded – whether that’s through the talent they attract and retain, the investment made in them or the competitive edge they gain in the marketplace.”

If you’re a business that would like some help to get to grips with your scope 3 emissions, get in touch with one of our friendly advisers today at info@netzeronow.org.

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Image from https://www.climatepartner.com/en/scope-1-2-3-complete-guide

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