sustainability
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What is Scope 3 Emissions?
9th February, 2023
If your organisation has commitments to become more sustainable and increase its efforts to reduce environmental impact, then you will more than likely have heard of or need to understand ‘Scope 3 Emissions’.
In a nutshell, Scope 3 Emissions involve all indirect upstream and downstream producing activities, everything your business did to make the product and everything involved in consuming your product. Scope 3 forms part of the Paris Agreement and many companies will be required to report Scope 3 emissions on a mandatory basis for the first time as early as 2024. The aim here is to ensure that companies are doing all they can to meet the requirements of the agreement and limit global warming to 1.5°C.
Examples of Scope 3 Emissions are:
Sourcing of raw materials:
- Business Travel (inc employee commutes)
- Waste generation
- Leased assets
- Facilities, tools etc used in manufacturing
- Purchased goods and services
- Distribution of your product
- Usage of your sold product
- End-of-life disposal of your product
It’s hardly surprising given all the above, that Scope 3 accounts, in most cases, for 70-90% of your organisation’s emissions. If limiting global warming wasn’t argument enough to act now, the business case for measuring and reducing emissions is also compelling.
By visually mapping out your entire value chain, you will be able to assess and improve the energy efficiency of your products and services, subsequently making cost reduction opportunities. You will be able to identify those suppliers who are already making their own efforts to cut emissions, and engage with those whose sustainability performance is lacking.
If addressing Scope 3 Emissions sounds like an impossible mountain to climb and the overwhelm is setting in, look to those organisations who have already embraced Scope 3 and started to make the changes needed. Companies like Mars, HP, Unilever, JLL, Walmart, and Ford (to name a few) have already begun leading the way; benefiting from the success of treading the path of a low carbon economy. They have found that by measuring and disclosing their climate-related risks, that they have deepened resiliency, increased competitiveness, improved risk management, attracted investors, and driven innovation.
Starting to pull together your business inventory to gain a complete picture of your value chain can be a cumbersome task, particularly if your supply chains are complex. Once this task is done you will be able to calculate your emissions, and start to see where the ‘quick wins’ are to get things moving in the right direction. The key is not to be tempted to put this off and essentially kick the proverbial can down the road. Don’t delay, take action now, and join the front runners!