This guide explains how to measure and understand your company’s value chain emissions, specifically Scope 3 emissions categories as defined by the Greenhouse Gas Protocol.
What is Scope 3 According to the GHG Protocol?
The GHG Protocol categorizes Scope 3 emissions as all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.
Scope 3 emissions are divided into 15 categories, reflecting various aspects of a company’s operations, both upstream and downstream. Understanding these categories helps companies identify where their significant environmental impacts lie and where to focus mitigation efforts.
💡 Our platform currently supports the tracking of Scope 3 categories 3.1 to 3.7 in detail and provides flexibility for entering pre-calculated emissions for categories 3.8 to 3.15. This comprehensive approach enables companies to account for their emissions across the entire value chain.
Why Measuring Scope 3 is Important
While we advise to start carbon accounting with measuring Scope 1 and Scope 2 Measuring Scope 3 emissions is vital for understanding your company’s complete environmental impact and for building effective sustainability strategies. Here’s why:
• Comprehensive Impact Assessment: Scope 3 emissions often constitute the majority of a company’s total emissions. Understanding these emissions is essential for identifying high-impact areas.
• Reduction Strategies: Scope 3 data enables companies to collaborate with suppliers or customers to adopt more sustainable practices, such as reducing waste or switching to greener materials.
• Regulatory and Investor Pressure: Regulations like the CSRD require Scope 3 reporting for climate material companies, and investors increasingly expect companies to disclose their full carbon footprint.
How to Account for Scope 3 Emissions
Identify Relevant Scope 3 Emissions
Determine which Scope 3 categories are relevant to your operations. This involves understanding your value chain and prioritizing the categories where your emissions are most significant.
Collect Data
Scope 3 emissions can be calculated using three types of data, depending on the category:
Spend Data: Financial data related to the purchase of goods or services.
Supported for categories 3.1 to 3.6.
Activity Data: Specific data on consumption or activity levels, such as kilograms of waste or transportation distances.
Supported for categories 3.4 to 3.6.
Estimates: For categories like 3.7 (Employee Commuting), emissions can be estimated using inputs like the number of full-time employees and work patterns.
💡 For categories 3.8 to 3.15, only pre-calculated emissions can be entered into the platform. Calculations must be performed externally and uploaded into the software.
Supported Scope 3 Categories
Scope 3 Category | Data Supported | Description |
3.1 Purchased Goods and Services | Spend Data, Pre-Calculated | Emissions from materials, components, and services purchased by the company. |
3.2 Capital Goods | Spend Data, Pre-Calculated | Emissions from purchased capital assets like machinery, buildings, and vehicles. |
3.3 Fuel and Energy-Related Activities | Spend Data, Pre-Calculated | Emissions from fuel production and energy activities not included in Scope 1 or 2. |
3.4 Upstream Transportation and Distribution | Spend Data, Activity Data, Pre-Calculated | Emissions from inbound logistics, warehousing, and transportation performed by third parties. |
3.5 Waste Generated in Operations | Spend Data, Activity Data, Pre-Calculated | Emissions from waste disposal and treatment processes like recycling, incineration, and composting. |
3.6 Business Travel | Spend Data, Activity Data, Pre-Calculated | Emissions from employee travel using airplanes, trains, rental cars, and hotels. |
3.7 Employee Commuting | Estimates, Pre-Calculated | Emissions from employee travel between home and work, estimated using the number of employees and remote work policies. |
3.8 Upstream Leased Assets | Pre-Calculated | Emissions from leased assets not included in Scope 1 or 2. |
3.9 Downstream Transportation and Distribution | Pre-Calculated | Emissions from transporting sold products to customers. |
3.10 Processing of Sold Products | Pre-Calculated | Emissions from the further processing of sold intermediate goods. |
3.11 Use of Sold Products | Pre-Calculated | Emissions from the use of products sold, such as energy consumed by electronics. |
3.12 End-of-Life Treatment of Sold Products | Pre-Calculated | Emissions from disposal or recycling of sold products at the end of their lifecycle. |
3.13 Downstream Leased Assets | Pre-Calculated | Emissions from assets leased to customers. |
3.14 Franchises | Pre-Calculated | Emissions from the operations of franchise-owned businesses. |
3.15 Investments | Pre-Calculated | Emissions associated with investments, such as project financing or equity. |
Entering Data
The platform supports two primary methods for entering Scope 3 data:
1. Data Entry: For a few data points, manually input the data using a guided process.
2. Data Import: For bulk data uploads, import large datasets using mapping tools Currently, only available for scopes 3.1 - 3.6 using spend data methodology.
💡 Activity-based Calculations: For categories 3.4 to 3.6, you can enter consumption data like kilometers traveled or kilograms of waste directly into the platform for more accurate calculations.
Interpreting Results
After entering the data, the platform generates comprehensive analytics and insights into your Scope 3 emissions. You can identify areas of improvement and opportunities for reduction based on detailed reports and visualizations.
Conclusion
Accounting for Scope 3 emissions is a critical step in understanding and reducing your company’s environmental impact. By supporting multiple data entry methods and a wide range of emission categories, the platform simplifies Scope 3 accounting, enabling businesses to achieve their sustainability goals with confidence.