Scope 3 Emissions: Challenges
Net Zero, Carbon Neutral and Zero Emissions have become the buzzwordin corporate sustainability, and emission reduction, the need of the hour. In this race to zero, businesses have a huge role to play in meeting the targets set at the Paris Agreement.
“You can’t really develop a decent climate change strategy unless you’ve
looked at Scope 3. Scope 3 is so crucial to all forms of climate change activity.”
– Tom Cumberlege, Carbon Trust
Scope 3 Emissions: Challenges
1. Enormous and Elusive
Scope 3 emissions are typically the biggest part of a company’s carbon footprint and the hardest to measure. The supply chain is said to for more than 80% of greenhouse gas (GHG) emissions and more than 90% of the impact on air, land, water, biodiversity, and geological resources.
A McKinsey Report found out that a company’s supply chain creates far greater social and environmental costs than its own operations. Mars, for example, has estimated that a whopping 86% of its emissions are Scope 3. Marks & Spencers found out that their supply chain accounted for 97% of their emissions.
2. Complicated Data Collection Process
However, measuring and reducing emissions can be tricky and complex especially when supply chains are concerned. Since Scope 3 involves a large set of stakeholders across processes, data collection can be a daunting task, especially for big organisations. Often, a lack of personnel resources and technical know-how hinders companies with their analysis and management of scope 3 emissions. The more complex the organisational structure is, the more challenging the data collection and calculation of GHG emissions becomes.
3. Lack of Transparency
The lack of transparency regarding the relevance of scope 3 emissions is another major challenge for many companies. To achieve an accurate reporting of Scope 3 data, the entire value chain needs to be mapped out and that can be a very challenging task, especially for companies who work with a multitude of stakeholders.
4. Lack of Stakeholder Cooperation
Since a successful management of scope 3 always requires a certain extent of collaboration with third parties like suppliers, employees, lessors/lessees or customers, a lack of cooperation along the value chain hinders companies from successfully managing scope 3 emissions. Therefore, collaborating with other actors in the supply chain is critical if we want to successfully address the Scope 3 emissions.
Significance of measuring Scope 3 emissions
There are a number of benefits associated with measuring Scope 3 emissions. By
measuring Scope 3 emissions, organisations can:
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Assess where emission hotspots are in their supply chain
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Identify energy and resource risks across their supply chain
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Find out which suppliers are leading and lagging in their sustainability performance
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Find key cost reduction opportunities
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Identify areas to increase energy efficiency
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Help their suppliers bring their sustainability initiatives up to an acceptable standard
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Improve the overall sustainability rating of their products and services
How to measure and reduce Scope 3 emissions
Measure transparently and digitally:
A key requisite in measuring Scope 3 is a detailed knowledge of the emission hotspots in the supply chain. The further down the supply chain the hotspots lie, the more difficult it becomes for the company to engage in cooperation. Snowkap helps companies calculate the company’s carbon emissions across Scope 3 in a scalable and cost effective way. The GHG measurement is done in a systemised and central digital platform. Snowkap also measures the footprint of all the suppliers in the value chain through an extensive ESG assessment.Stakeholders receive detailed insights on hotspots via comprehensive online dashboards, including carbon reports of each supplier.
Analyse your data:
Once you have the data in hand, you can assess which areas need significantly more intervention than others- where does most of your GHG concentration lie? Is it raw material production, energy consumption, or waste management? The impactful changes start at this stage. While many companies do a great job of measuring the GHG emissions, very few guide you through the entire process. Snowkap not only helps to measure the data but provides actionable insights and reduction ideas based on the data derived. It guides you on what steps can be taken at each level to make a positive change in the organisation.
Reduce and Offset:
You know where to make the change, you understand how to make that change but it can still be a bit challenging to implement it. Start with smaller changes such as setting environmental targets cross material, logistic, energy and waste management. Snowkap eases the process by working closely to reduce and offset your footprint.
For each transaction with a supplier, companies can view their GHG emissions real time on Snowkap’s procurement platform. Once they know where each supplier stands, companies can choose to favour more sustainable suppliers and/or incentivise and/or demand the others to switch to more sustainable processes. With our partner network, Snowkap helps provide suppliers with resources and training to make their transition to sustainability easier.
Snowkap also provides insights on reducing your carbon and plastic footprint at each level, for example, switching product packaging in favour of lower carbon alternatives. To make the progression smoother, Snowkap even connects companies with suppliers who provide these alternatives.
Conclusion
Regardless of the approach to sustainability or the size of the value chain, businesses are realising that climate leadership and long-term resilient profitability depends on reducing climate-induced risk across the value chain, with emissions reductions becoming a mainstream requirement. The overall carbon reduction is highly dependent on supply-chain collaboration. For an organisation to become sustainable, reducing the Scope 3 emissions across processes is crucial and earlier organisations place the focus on Scope 3, the better.
FAQs
What are the challenges with Scope 3 emissions?
Scope 3 emissions are indirect emissions that occur in the value chain of a company, both upstream and downstream. They can be challenging to measure and manage because they fall outside a company’s direct management or ownership,
making them difficult to control1. Additionally, they are hard to assess due to the difficulty of collecting high-quality data on the type or volume of emissions.
What is a scope 3 emissions strategy?
A Scope 3 emissions strategy involves understanding the implications for your specific business, measuring and managing those emissions, working closely with suppliers and customers, and setting specific targets on Scope 3 emissions. Many companies have begun to set specific targets on Scope 3, with the more advanced companies focusing on science-based initiatives.
What are Scope 3 emissions and why are they important?
Scope 3 emissions are important because they often represent the majority of an organization’s total greenhouse gas (GHG) emissions. Measuring Scope 3 emissions has several benefits. For most businesses and public bodies, the majority of their GHG emissions and cost reduction opportunities are outside their own operations. Addressing Scope 3 emissions can help advance an organization’s decarbonization and sustainability journey.
Why is it important to measure scope 3 emissions?
It is important to measure Scope 3 emissions because it allows businesses to assess where the emission hotspots are across their value chain to prioritize reduction strategies, identify which suppliers are leaders and which are laggards in terms of their sustainability performance, inform decision making across procurement, product development and logistics teams regarding which interventions can deliver the most significant emission reductions, encourage product innovation to create more sustainable and energy-efficient products, advance their climate strategy to create genuine, quantifiable, and visible change, and positively engage with employees to reduce emissions from business travel and employee commuting.
What are the materials used in scope 3 emissions?
Scope 3 emissions come from an array of places—vehicles that transport clothing to retailers, energy used in manufacturing (if at facilities not owned by the company, otherwise, these would be scope 1), energy used to grow raw material, energy used by consumers to wash and dry the clothing, and the greenhouse gas emissions generated as the materials decay in a landfill1. The materials used in Scope 3 emissions can vary depending on the industry and the specific activities of the company.
Are Scope 3 emissions the largest?
Scope 3 emissions are often the largest share of a company’s carbon emissions—typically 80–90%1. This is because they include all indirect emissions that occur in the value chain of a company, both upstream and downstream. For example, for an oil company, the Scope 1 and 2 emissions are only a small proportion of its related emissions, whereas the consumption and combustion of their products contribute the most emissions (Category 11 – Use of sold products).
