As companies ramp up sustainability initiatives, reducing carbon emissions has become a critical priority in the pursuit of net-zero goals. Organizations are increasingly focusing on Scope 3 emissions—those generated across the entire value chain, emphasizing their importance in these calculations. These emissions encompass everything from raw materials and waste generated to employee commuting. However, measuring Scope 3 emissions, which often account for the majority of an organization’s total emissions, presents complex challenges. Here, we explore how to measure Scope 3 emissions effectively, from mapping out the supply chain to selecting the best measurement method and gathering accurate data.
What are Scope 3 emissions?
Scope 3 emissions include all indirect emissions that occur both upstream and downstream of an organization’s direct operations. These emissions go beyond Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from purchased electricity). For many businesses, Scope 3 emissions represent the bulk of their carbon footprint and are tied to activities outside of their direct control, such as sourcing raw materials, transporting goods, waste management, and even the usage and disposal of products by end customers. These emissions are sometimes referred to as value chain emissions and span a wide range of activities across five primary categories:
Purchased goods and services: Emissions from the production of materials or services the organization buys.
Transportation and distribution: Emissions associated with transporting and distributing products, both upstream and downstream.
Employee commuting: Emissions generated by employees traveling to and from work.
Waste generated in operations: Emissions from the disposal and treatment of waste generated by business operations.
Use of sold products: Emissions produced when the final product is used and disposed of by the end customer.
What are the challenges of measuring Scope 3 indirect emissions?
Measuring Scope 3 emissions is challenging because they originate from multiple sources outside the direct operations of a company, often requiring input from third parties. Insightful data plays a crucial role in engaging value chain partners and implementing effective carbon reduction efforts as part of a broader climate change strategy. Some primary obstacles include:
Data collection and accuracy: Obtaining accurate data from a wide network of suppliers can be complex, especially when many of them may not have mature systems for tracking their emissions.
Varied emission sources: Scope 3 emissions encompass diverse sources, including raw materials, waste, transportation, and even downstream use, making it difficult to capture the entire spectrum accurately.
Resource and cost intensity: Collecting and analyzing Scope 3 data can require substantial resources and financial investment, challenging for many organizations.
Inconsistent reporting standards: Different suppliers may follow varying standards for measuring emissions, leading to inconsistent data and difficulty compiling a reliable footprint.
Supply chain complexity: Large organizations often work with hundreds or thousands of suppliers across different tiers, making mapping out all contributors a logistical hurdle.
What are the different methods of measuring Scope 3 emissions?
Selecting a measurement approach depends on the data available, the resources, and the level of precision an organization needs. The four main approaches to Scope 3 emissions measurement are:
- Industry averages: This approach uses sectoral emissions factors or averages from organizations in the same sector. Industry averages serve as a baseline when more specific data is unavailable, providing an initial estimate for carbon footprint calculations.
- Spend-based method: This method estimates emissions based on the cost of purchased goods or services. The value is multiplied by a corresponding emission factor derived from national averages for a sector. Although this approach is not highly precise, it is straightforward and can provide a helpful approximation of total emissions.
- Supplier-based method: Using primary data from individual suppliers, this approach provides the most accurate form of Scope 3 accounting. Supplier-based measurement involves tracking the emissions data from individual suppliers, using it to calculate emissions associated with the purchased goods and services.
- Hybrid method: The hybrid approach combines elements from all the above methods, presenting a comprehensive yet resource-intensive picture of total emissions. This method can yield accurate results but requires more investment in data collection and analysis. Data collection and analysis are crucial to identify opportunities for emissions reductions throughout the value chain.
How to get started with Scope 3 emissions measurement
Successfully measuring Scope 3 emissions requires a structured approach. Here’s how businesses can begin:
1. Map out your value chain
Creating a detailed map of the supply chain is essential. By visualizing contributors, a company can identify emissions hotspots, prioritize key suppliers, and establish baseline measurements. This mapping enables businesses to determine which suppliers contribute most significantly to their emissions and, consequently, require the most detailed data collection. For most organizations, the majority of greenhouse gas emissions and potential cost reduction opportunities occur outside their own operations. For example, Sweep’s “Tree” tool helps organizations map out and visualize emission contributors, enabling a baseline assessment even with limited initial data.
2. Choose the appropriate measurement method
Selecting a measurement method depends on data maturity and resource availability. If precise, supplier-based data is accessible, it is ideal to prioritize that. Alternatively, companies with limited data can start with industry averages or spend-based methods, building out more detailed supplier data over time. Sweep’s platform assists companies in identifying the best method for baseline calculations based on data maturity.
3. Engage strategic suppliers
Because a limited number of suppliers (often the top 20%) are typically responsible for the majority (up to 80%) of emissions, focusing on these contributors is crucial. Engaging these suppliers in data collection and reporting is vital for capturing emissions hotspots accurately. Businesses can simplify this process by leveraging surveys or data collection tools for key suppliers, helping them track and share emissions data.
4. Establish data collection and tracking processes
Use tools that enable efficient data collection, verification, and updates. Empower procurement and sustainability teams to collect ongoing data, sending surveys or setting up automated systems where possible. These tools allow businesses to centralize data from different suppliers and ensure that emissions are tracked accurately, minimizing the risk of gaps or inconsistencies.
5. Set targets and track progress
Establishing emissions reduction targets aligned with net-zero objectives helps guide the overall strategy. Companies can monitor progress by comparing annual emissions data and adjusting strategies as needed. Regularly evaluating and communicating progress not only helps maintain momentum internally but also demonstrates the company’s commitment to sustainability to stakeholders.
How can Sweep help?
Sweep offers a comprehensive, user-friendly solution to help companies measure and manage Scope 3 emissions at varying stages of data maturity. Here’s how:
1. Customized data collection
With Sweep, companies can model supply chain emissions using benchmark data or spend-based methods as a starting point, especially if precise data is initially lacking. The platform can send customizable climate surveys to suppliers, making it easy for them to participate in data collection and kickstart their own emissions tracking journey.
2. Tree visualization tool
Sweep’s Tree tool is particularly useful for mapping out complex supply chains, providing a clear, visual representation of all emission sources and highlighting high-emission contributors. By identifying emission hotspots through this detailed map, companies can prioritize reduction efforts and set informed targets.
3. Efficient data tracking and reporting
Automated data tracking and centralized reporting streamline the collection process and reduce administrative burden. Sweep’s platform ensures data accuracy through automated updates and reporting aligned with standards like the Greenhouse Gas Protocol (GHG Protocol). Measuring GHG emissions in the supply chain is crucial to understanding and mitigating an organization’s overall GHG impact.
4. Facilitating supplier engagement
The platform simplifies the process of engaging suppliers, making it easier for businesses to work closely with them on sustainability initiatives. By encouraging suppliers to be transparent about their carbon footprint and adopt greener practices, Sweep helps foster a collaborative approach to emissions reduction.
Moving forward: Embracing a cyclical approach to climate action
Achieving net-zero emissions is not a one-time process. Climate action is best approached as a cycle—measure, set targets, reduce, and communicate. Businesses can begin with baseline data and implement reduction activities across the supply chain. Over time, organizations can refine their measurements by incorporating more precise supplier data and improving data collection practices. Understanding and addressing greenhouse gases is crucial, as these emissions contribute significantly to an organization’s carbon footprint and mitigating them is essential to combat climate change.
For companies seeking effective and streamlined ways to manage their emissions journey, platforms like Sweep can be invaluable. With the right tools and a clear strategy, businesses can gain visibility into their value chain, identify emission hotspots, and create meaningful partnerships with suppliers. As they continue to improve data quality and transparency, they contribute to global sustainability efforts, setting an example for other companies in their sector.
