By: Emma Abrams
You may have seen this image before- a basic breakdown of the 3 scopes of greenhouse gas emissions. Scope 1 emissions are direct emissions from stationary combustion, like burning natural gas to heat your office, or mobile combustion, like fuels used by a company truck. Scope 2 emissions are the indirect emissions from purchased electricity. But what are ‘indirect’ emissions, and what does upstream and downstream mean?
The Greenhouse Gas Protocol (GHGP) defines Scope 3 as “all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company”. This includes upstream (material acquisition and pre-processing) and downstream (distribution, storage, use and end-of-life). There are 15 categories within Scope3:
1. Purchased goods and services
2. Capital goods
3. Fuel- and energy-related activities, not included in Scope1 or Scope 2 (includes upstream emissions of purchased fuels and electricity)
4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel
7. Employee commuting
8. Upstream leased assets
9. Downstream transportation and distribution
10. Processing of sold products
11. Use of sold products
12. End-of-life treatment of sold products
13. Downstream leased assets
14. Franchises
15. Investments
Categories 1-8 cover upstream emissions, and categories 9-15 cover downstream. Not all categories are applicable or significant for all companies. For example, a company may have no leased assets, or there may be limited data available. Many inventories include ‘cradle to customer’ emissions, which covers Scope 1 and 2 and Scope 3.1-7 and 3.9.
Scope 3 emissions are often the largest category for a company, accounting for as much at 85-95% of emissions. Lowering Scope3 emissions can be challenging, as they arise from other actors along the value chain. However, measuring and reporting these emissions is key in the transition towards net-zero, as well as boosting companies’ bottom line. Additionally, companies may soon be required to report these emissions under SEC regulations and other regulatory bodies.
The Greenhouse Gas Protocol says that “Businesses have found that developing corporate value chain (Scope 3) and product GHG inventories delivers a positive return on investment”. Doing so allows companies to understand risks and opportunities along their value chain, enhance investor knowledge and trust and identify GHG reduction opportunities. There are many risks (and opportunities) associated with a company’s value chain. By taking steps to measure and reduce their Scope 3 emissions, companies can improve efficiency, increase customer loyalty and differentiate themselves as an environmentally-conscious business.
Simply put, businesses can’t manage what they are not measuring. Measuring Scope 3 emissions is crucial in seeing the whole picture of a company’s environmental impact.
Is your business looking to measure its climate impact and become a more sustainable business? Want to know the Scope 3 emissions of your business? You can learn more about our Sustainability Consulting Services and contact us today to start your sustainability journey!
Emma is our 2023 Summer Sustainability Intern, and a sophomore at the University of Delaware, where she is majoring in Environmental and Natural Resource Economics. She spent her first semester studying in Auckland, New Zealand. While an avid world traveler, the lowcountry will always be home; She grew up swimming and tossing cast nets in the creeks around Charleston and Edisto, and her love for this environment drives her passion for sustainability. Emma has long been involved in environmental activism, and now hopes to make a career in protecting the ecosystems and communities she cares about. With experience in advocacy, research, data analysis and a healthy dose of optimism, she hopes to bring a fresh perspective and new solutions to the environmental field. Emma is excited to be working with Emerger Strategies to help Charleston create a greener future.