Today, let's demystify one of the more complex aspects of sustainability reporting: Scope 3 emissions. If you've ever felt like you're navigating through a fog while trying to understand Scope 3, you're not alone. These emissions are indirect emissions that occur in a company’s value chain, and they are notoriously elusive to pin down. But fear not! I'm here to guide you through this complex terrain.
Before we jump into the deep end, let's dip our toes into the basics. Scope 3 emissions are a part of the Greenhouse Gas Protocol and encompass indirect emissions that are not covered by Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company). Scope 3 includes all other indirect emissions that occur in a company’s value chain. In simple terms your Scope 3 emissions are the emissions that you pay or cause others to produce. Check out our article "Green House Gas Emission Scopes" for a deep dive into all 3 scopes.
This includes emissions from the production of goods and services that your company buys. Think of it as the emissions tab your suppliers add to your environmental bill.
These are emissions associated with the production of physical assets used by your company. Whether it’s machinery, buildings, or equipment, if it’s a fixed asset, it’s got a carbon footprint.
This covers emissions related to the extraction, production, and transportation of fuels and energy that you purchase. These emissions are often referred to as the well-to-tank emissions.
Emissions from transporting and distributing products in the supply chain before they reach your company. It’s all about the journey, not just the destination!
This includes emissions from the disposal of waste generated in your operations. Yes, even trash talks... about your carbon footprint!
Emissions from transportation used for business travel. Whether it’s flights, trains, or automobiles, if your employees are on the move, so are your emissions.
Similar to business travel, but this focuses on the daily trek your employees make to and from work. Who knew that carpooling could be a part of your sustainability strategy?
Emissions from the operation of assets that are leased by your company, but not owned. It’s like being responsible for your rented apartment’s energy use.
This involves emissions from transporting and distributing your company’s products after they leave your gate. Your product’s journey still counts after it waves goodbye.
Emissions from the processing of products sold by your company in downstream value chains. If your product needs a makeover before it hits the shelves, those emissions need counting.
Emissions from the end use of your company’s sold products. This can often be the largest chunk of the pie, especially if you sell high-energy products like vehicles or appliances. These emissions can range from the obvious such as tailpipe emissions from vehicles to the less obvious such as the energy used in the cleaning and maintenance of flooring.
Emissions from the disposal and treatment of products sold by your company at the end of their life. It’s not just about creating products, but also about retiring them responsibly.
Emissions from the operation of assets leased out by your company. Think of it as being a landlord who cares about the carbon footprint of your tenants.
Emissions from franchise operations that are part of your business. If you’re in the franchising game, this is your environmental footprint’s extended family.
Emissions associated with investments made by your company. Yes, your money talks, but it also emits, so think about where it’s going.
Now, before you dive headfirst into the deep end of Scope 3, it's crucial to recognize that not all categories may be relevant to your business. The relevance can vary widely depending on your industry, scale, and business model. This is where performing a materiality assessment becomes invaluable. A materiality assessment helps you identify and prioritize the Scope 3 categories that have the most significant impact on your business and are most critical to your stakeholders. By focusing on these key areas, you can allocate your resources more effectively and make strategic decisions that significantly enhance your sustainability efforts.
Understanding and managing Scope 3 emissions can be a game-changer. Not only does it help in reducing your overall carbon footprint, but it also aligns with global shifts towards more sustainable business practices, potentially boosting your brand’s reputation and compliance standing.
So, there you have it! A whirlwind tour of the 15 categories of Scope 3 emissions. By tackling these, you're not just ticking a box; you're leading the charge in the corporate sustainability arena. Let's roll up our sleeves and turn these challenges into opportunities for innovation and leadership in sustainability!
Until next time, keep striving for those green goals!
Cofounder and CEO at Tool Zero
Chris Walton
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