Scope 3 emissions cover a company's indirect emissions along the entire value chain, from raw material extraction to product end of life.
Impact of Scope 3 on the corporate carbon footprint
Scope 3 is the most comprehensive emissions category under the Greenhouse Gas (GHG) Protocol. Depending on the industry, it can make up the largest share of a company's corporate carbon footprint, representing up to 90% of total emissions.
Diversity of Scope 3 emissions categories
The GHG Protocol groups Scope 3 emissions into 15 categories along the value chain. Relevant upstream activities include, for instance, raw material extraction and production, purchased goods and services, and capital goods. In the downstream part of the value chain, the processing of sold products, transportation and distribution, and the use and end-of-life treatment of products can have significant impacts on a company's carbon footprint.
A thorough differentiation of emission sources enables companies to develop more targeted mitigation strategies and measures.
Scope 3 emissions challenges
Calculating and monitoring Scope 3 emissions is complex due to the large number of actors and processes involved along the value chain. Companies also frequently have limited leverage over their value chain partners to effect change.
While Scope 1 and 2 emissions have been on many companies' sustainability agendas for some time, regulators are now increasingly putting the spotlight on Scope 3 emissions. Relevant initiatives include the European Corporate Sustainability Reporting Directive (CSRD), the Californian Climate Disclosure Rules, and reporting requirements for listed companies in many jurisdictions around the world. The Task Force on Climate-Related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB) have also developed voluntary reporting frameworks that place a strong emphasis on Scope 3 emissions.
Scope 3 emissions reduction in the supply chain
Companies can mitigate their Scope 3 emissions in a number of ways. In the upstream value chain, they can select greener suppliers, promote more sustainable transportation solutions and more efficient logistics routes. Product adjustments and redesigns can also go a long way in reducing the need for carbon-intensive input materials and lowering downstream emissions, for example during the product use phase.
Rigorous accounting and monitoring of Scope 3 emissions lays the foundation for effective climate change mitigation strategies and measures. Close engagement and collaboration with stakeholders, particularly suppliers, is critical for companies to achieve meaningful impact.
The role of Scope 3 emissions in sustainability
The carbon footprint is an integral part of a company's overall sustainability efforts. The consideration of Scope 3 emissions in reporting and monitoring processes can inform key strategic decisions at the corporate level. It can also provide many opportunities, for instance in terms of innovation, new products, markets, and customers.