AUTHOR – Jessica Di Bartolomeo
The GHG Protocol (Greenhouse Gas) is the international standard-setter for GHG accounting across public and private sectors. It was the GHG Protocol who created the classifications of scopes for GHG emissions and divided them into scopes 1, 2 and 3 in order to facilitate reporting and categorize GHG emissions and avoid double-counting. To make it easier to report GHG emissions across the three scopes, the GHG Protocol created a web-based tool called “Scope 3 Evaluator”, that allowed companies to estimate scope 3 (value chain) emissions and identify focus areas for a relevant and accurate scope 3 inventory. However, as of August 31, 2023, the GHG Protocol discontinued the tool, which had been functioning on decade-old technology.
The complexities of calculating scope 3
In many sectors, scope 3 emissions are typically the largest proportion of a company’s GHG emissions inventory. Scope 3 emissions are classified as indirect emissions and include everything from business travel, office equipment as well as transportation of goods and more. The extended nature of a value chain presents a challenge for identifying relevant categories of emissions sources to track and the minimum boundaries that need to be covered within those categories. This can include, for example, which suppliers should be included or excluded from reporting emissions from Purchased goods and services. The Science-Based Targets initiative (SBTi) Value Chain report highlights that companies tend to focus on sources that are simple to calculate rather than ones that are more significant to their business.
The screening approach
The screening approach, previously facilitated by the GHG Protocol’s Scope 3 Evaluator tool, consists of estimating emissions across all of scope 3. It is a useful approach for tackling scope 3 by determining the relative size of each category, ranking them and setting boundaries within a desired coverage (e.g. top 90% of scope 3 emissions). Screening typically relies on spend data to calculate emissions at a high-level using economic emissions factors (emissions/$ spent). These provide a sense of the significance for each category and underscore emissions hotspots where more informative calculations should be undertaken beyond the spend-based approach, namely using physical emission factors (per unit of energy, distance, mass, etc.) and supplier-specific data. For companies setting Science-Based Targets, this approach is required as a first step in setting a near-term target, and if scope 3 emissions represent 40% of more of the emissions across all three scopes, then a scope 3 target must be set.
In addition to the size of emissions, companies should consider influence, risk, stakeholders, outsourcing, and sector-specific guidance in determining which scope 3 sources to account for, according to the GHG Protocol Value Chain (Scope 3) Standard. For example, considering the potential to influence the emissions may look like completing a supplier screening to identify the top suppliers by spend. Then, it is possible to identify opportunities to engage with top suppliers on their own GHG emissions accounting and incorporate that data into Purchased goods and services reporting.
Other frameworks and regulations may have specific requirements on scope 3 sources that must be covered. For instance, PPN 06/21 in the UK requires captured organizations, those bidding on public contracts above a certain size, to calculate emissions from the following categories: Upstream transportation and distribution, waste generated in operations, business travel, employee commuting, and downstream transportation and distribution.
How we can help
Accounting for scope 3 emissions is an iterative process in improving the calculation so the metrics produced provide actionable insights on possible reductions and allow tracking progress on these actions.
Ecometrica can help with tackling your scope 3 inventory. Our robust Sustainability Platform can help you complete a full GHG assessment including all categories of Scope 3, whether you are getting started and want a better understanding of your scope 3 emissions, need to comply with in-depth scope 3 reporting requirements or are looking to set Science-Based Targets. Our emissions factors database alongside expert support facilitates calculating spend, physical or supplier-specific emissions factors for the most significant sources to your business.
For more on how we can support your scope 3 calculations, take a look at two of our client case studies:
- Wyld, a cannabis company, needed to quantify their complex and diverse scope 3 emissions
- OLM Systems, a software and services organization, was required to comply with PPN06/21 and therefore report on various scope 3 emissions