How to measure scope 3 emissions

Want to track your company's indirect emissions? Here's what you need to know about measuring scope 3 emissions - the greenhouse gases produced across your value chain.

Key points upfront:

• Scope 3 covers 15 emission categories including purchased goods, transportation, and waste

• For most companies, scope 3 makes up 80%+ of total emissions

• You can measure using spend-based, activity-based, or supplier-specific methods

• Start with easily available data and refine over time

4 steps to measure scope 3:

1. Map your emission sources across the 15 categories

2. Collect data from suppliers and internal systems

3. Apply emission factors to calculate totals

4. Verify and improve data quality

Quick comparison of measurement methods:

The best approach? Start with spend-based calculations to identify hotspots. Then gradually move to supplier-specific data for your biggest emission sources.

Tools needed:

• Carbon accounting software

• Emission factor databases

• Data collection templates

• Supplier engagement program

Ready to start measuring? Let's dive into the details.

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How to Measure Scope 3 Emissions

Tracking Scope 3 emissions requires a structured process to ensure accurate calculations throughout your value chain. Companies like Amazon, Apple, and Unilever have developed efficient ways to measure these emissions, offering useful insights. Here's how the process typically works:

1. Identify Scope 3 Categories

Start by examining the GHG Protocol's 15 categories to figure out which ones are relevant to your operations. Focus on the ones that contribute the most to your emissions. For example, Walmart discovered that their largest category was purchased goods and services, so they prioritized working with suppliers when building their measurement framework.

2. Collect Data

Reliable data collection is the foundation for accurate reporting. Begin with data that's easily accessible, such as procurement details and spending records. Companies like Google and Netflix have implemented systems to track:

• Emissions from specific suppliers

• Transportation and distribution activities

• Employee commuting and business travel

• Waste management practices

"The most accurate method is supplier-based primary data collection, though it requires significant time and resources to implement effectively", according to the GHG Protocol guidance.

3. Choose Emission Factors

Emission factors help translate your collected data into carbon emission estimates. These factors should come from trustworthy sources based on your needs.

4. Calculate Emissions

Once you have your data and emission factors, calculate emissions by multiplying the activity data by the relevant factors. For example, if you're evaluating the carbon footprint of purchased materials, multiply the volume or spending for each material by its associated emission factor. Levi's applies this approach to monitor emissions in their supply chain, blending supplier data with widely accepted industry factors.

5. Verify and Refine Data

Ongoing verification and updates are essential to improve accuracy. Unilever, for example, combines data from suppliers with secondary sources and regularly revisits their methods for enhancements. Focus on these key areas:

• Validate sources of data

• Identify and address any gaps in information

• Update emission factors regularly

• Work closely with suppliers to access better primary data

You don't need to perfect your process right away. Start with the data you have and make improvements over time. Companies like Apple and Google show that building a strong system for measuring Scope 3 emissions is a step-by-step journey that evolves and gets more precise as you go.

Ways to Calculate Scope 3 Emissions

Overview of Calculation Methods

There are several ways businesses can calculate Scope 3 emissions, and the best method often depends on the type of data they have and their specific needs. The most common approaches are spend-based, activity-based, supplier-specific, and hybrid methods.

The spend-based method uses financial transaction and purchasing data to estimate emissions. It’s especially handy for categories like purchased goods and services, business travel, and capital goods. By multiplying spending amounts by emission factors specific to the industry, companies can get a quick approximation of their emissions.

With activity-based calculations, companies rely on operational details like material weights, fuel consumption, or transport distances to calculate emissions. This method offers more precise results and can differentiate between biogenic and fossil emissions, making it ideal for in-depth environmental reporting.

The supplier-specific method collects emissions data directly from suppliers. This pathway provides the most accurate results but requires close collaboration with supply chain partners. It’s particularly effective for businesses that have solid supplier relationships and well-established data-sharing practices.

"The most accurate carbon accounting method is the hybrid method, which effectively combines the strengths of various approaches to provide a comprehensive and precise assessment of emissions."

Comparing Calculation Methods

Each calculation method brings its own strengths and challenges to the table. Here's a side-by-side look:

The GHG Protocol suggests starting with spend-based methods for categories like purchased goods or travel when detailed data isn’t available. Over time, companies can shift to activity-based or supplier-specific approaches for areas where greater accuracy is needed.

Often, a mix of methods works best. A proven strategy is to gather supplier-specific data from key suppliers that make up around 80% of spending. For smaller suppliers where data collection is less practical, companies can use spend-based calculations instead. This combination ensures a more effective and balanced assessment.

How to Track and Manage Scope 3 Emissions

Tools for Tracking Scope 3 Emissions

Keeping tabs on Scope 3 emissions is no easy task, but modern carbon accounting software simplifies the process. Take Emerald Power, for example. Their platform efficiently handles the complexity with features like automated data collection and real-time emissions tracking. If you’re using their Pro plan, you'll also gain access to AI-driven automation and seamless integration with your current software systems, making it a breeze to keep your emissions data accurate.

Emerald Power uses GHG Protocol-compliant formulas, ensuring that your calculations meet global standards. It even includes benchmarking tools, letting you see how your company stacks up against competitors. Smart alerts and task management features help your team stay organized, so you're always on top of deadlines for data collection and reporting.

Work with Suppliers for Better Data

Accurate Scope 3 emissions data starts with strong partnerships. According to the GHG Protocol, one of the most reliable ways to measure emissions is by gathering supplier-specific data. While it's more demanding, the insights are worth the effort. Here's how companies can approach it:

"The more specific methods are often more time and labor intensive. The best method for each category depends on factors such as the relative size of the emissions from the scope 3 activity, the company's business goals, data availability, data quality, the cost and effort required to apply each method, and other criteria identified by the company." - GHG Protocol, Technical Guidance for Calculating Scope 3 Emissions.

Set Goals to Reduce Emissions

If you’re serious about tackling Scope 3 emissions, setting clear reduction targets is key. According to the Science Based Targets initiative (SBTi), companies with Scope 3 emissions making up over 40% of their total footprint should set reduction goals for at least 67% of those emissions.

To get started, you might use CDP-based or spend-based methods to create a baseline before gathering more precise data. Tools like Emerald Power can help. Their benchmarking and goal-tracking features allow you to keep an eye on your progress in real time. Plus, their in-depth reports will highlight where you’re excelling and where you need to step up efforts to meet your targets.

Helpful Resources for Scope 3 Reporting

GHG Protocol Guidelines

The GHG Protocol is widely regarded as the standard for tackling Scope 3 emissions. Their Technical Guidance provides detailed methods for calculating emissions across all 15 Scope 3 categories, from purchased goods to business travel. One of their key recommendations is to start with a screening process to pinpoint your largest emission sources and potential areas for reduction.

"The GHG Protocol provides Scope 3 Calculation Guidance which details multiple calculation methods for each Scope 3 category based on level of specificity and available data." - GHG Protocol, Technical Guidance for Calculating Scope 3 Emissions.

Software for Emissions Tracking

Using modern carbon accounting platforms can simplify the complexity of emissions tracking. Here's a comparison of top solutions and their key features:

Templates and Emission Factor Sources

The EPA offers extensive emission factor databases that are great for accurate calculations. They also provide handy templates to guide you in identifying key categories and estimating your greenhouse gas emissions. If you’re in a specific industry, you can access tools tailored to your sector’s unique emission factors.

When choosing emission factor sources, it’s best to use ones that align with your region and industry. U.S.-based organizations often rely on EPA resources, while European companies may benefit from databases specific to their area. For a balanced approach, combine these tools with supplier-specific data for calculations that are both precise and practical.

Conclusion

Summary of Key Points

Tracking Scope 3 emissions requires a focused approach coupled with reliable information and clear methodologies. The supplier-based method is often viewed as the most accurate way to do this, though it requires considerable effort to implement. Recent research shows that eight key supply chains contribute to over half of the world's carbon emissions, underscoring the need for precise measurement and proactive oversight.

The process of measuring Scope 3 emissions is not one-size-fits-all. The methods you choose should align with your organization's unique situation. While supplier-specific data offers the highest level of accuracy, many businesses find success with hybrid approaches that mix practicality and precision. This is especially critical for organizations managing complex supply chains where complete primary data isn't readily available.

"The most effective approach to Scope 3 measurement combines supplier-specific data with strategic use of secondary data sources, allowing companies to focus resources where they matter most." - GHG Protocol Technical Guidance

Next Steps for Businesses

Getting started with Scope 3 measurements might feel daunting, but a step-by-step approach can streamline the process. Begin by using spend-based methods to pinpoint emission hotspots in your supply chain. Applying the Pareto principle - focusing on the suppliers that contribute around 80% of your emissions - can guide your efforts, helping you channel resources into the areas where they will have the greatest impact.

Here’s how you can move forward:

• Start with what you have: Use existing financial data and standard emission factors to lay the groundwork for a baseline.

• Target key players: Prioritize suppliers responsible for the largest share of emissions and engage them in the measurement process.

• Use technology wisely: Invest in emission tracking tools or software to simplify data collection and analysis.

Comprehensive Scope 3 measurements take time, but they don’t have to be perfect right away. Focus on getting started with the data you have, and gradually refine your methods as more information becomes accessible. Progress, not perfection, should be the ultimate goal.

FAQs

How do I monitor my scope 3 emissions?

Monitoring scope 3 emissions boils down to having a structured plan that aligns with your organization's established scope 1 and 2 boundaries. To do this effectively, you'll need reliable data from suppliers and other important emission sources. Companies like Walmart and Unilever have succeeded in this area by kicking off supplier engagement programs aimed at gathering precise, trustworthy information.

To set up a solid monitoring system, consider these steps:

• Set clear boundaries: Ensure they match your defined scope 1 and 2 limits.

• Focus on key data sources: Start with primary data pulled from invoices or purchase records.

• Work closely with suppliers: Concentrate on involving the 20% of suppliers who are responsible for around 80% of your emissions.

"The most effective approach to Scope 3 measurement combines supplier-specific data with strategic use of secondary data sources, allowing companies to focus resources where they matter most." - GHG Protocol Technical Guidance

How do I calculate my scope 3 emissions?

The way you calculate these emissions will hinge on your access to data and available resources. While supplier-specific data gives the highest level of accuracy, many organizations rely on the average-data method as a starting point. This method applies industry-standard emission factors to the quantities of goods you've purchased.

Here's a quick breakdown of common calculation methods:

A practical way to proceed is to start with the spend-based method to pinpoint major emission hotspots. Then, gradually transition to supplier-specific data collection for emission sources that have the biggest impact. Companies like Amazon and Google have seen success by combining these methods to match their data availability and priorities.