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What are Scope 3 emissions and why do they matter?

Article, Industry Insights

What are Scope 3 emissions and why do they matter?

Greenhouse gas (GHG) emissions are categorised based on their sources and control within an organization’s operations. The categories are defined by the Greenhouse Gas Protocol, a widely recognized standard for GHG accounting and reporting as follows:

Scope 1 Emissions

Scope 1 emissions are direct greenhouse gas emissions that result from sources owned or controlled by the organization. These emissions typically include emissions from burning fuels such as natural gas, diesel, gasoline, and coal for heating, cooling, electricity generation, and vehicle operation, process emissions from chemical reactions or industrial processes and fugitive emissions that occur unintentionally during the extraction, production, processing, storage, transmission, and distribution of fossil fuels, such as methane leaks from oil and gas operations. Examples of Scope 1 emitters include boilers, furnaces, vehicles, and industrial equipment directly operated by the organization.

Scope 2 Emissions

Scope 2 emissions are indirect greenhouse gas emissions associated with the generation of purchased or acquired electricity, steam, heating, or cooling consumed by the organization. Some people say that scope 2 emissions are more controllable in some ways compared to Scope 1 emissions because they can be influenced by purchasing decisions and energy management practices.

Scope 3 Emissions

Scope 3 emissions are indirect greenhouse gas emissions that result from sources outside of the organization’s direct control but are associated with its activities. These emissions typically occur throughout the value chain and include upstream emissions associated with the extraction, production, and transportation of purchased goods and services, such as raw material extraction, manufacturing, and transportation of goods to the organization. And downstream emissions associated with the use and disposal of products and services sold by the organization, including transportation, product use, and end-of-life treatment. This category also includes other indirect emissions such as employee commuting, business travel, waste generation, and investments.

Why are Scope 3 emissions so important?

Scope 3 emissions are important for achieving our overall global emissions reduction targets as they often represent the largest portion of a company’s total carbon footprint and can vary significantly depending on the industry and supply chain complexity. Barry Parkin, Chief Procurement and Sustainability Officer at Mars has calculated that 95% of their total emissions are Scope 3.

Increasingly regulation is compelling businesses to extend their carbon emissions management and reporting to include Scope 3 – shining the spotlight on the supply chain in terms of carbon reduction initiatives.

Read more about how Achilles can help your business reduce emissions by as much as 50% within 5 years, how Morgan Sindall has achieved a 54% carbon reduction in 6 years and how Sisk has achieved carbon zero certification using the Achilles Carbon Reduce programme.

The benefits of measuring Scope 3 emissions

Measuring and managing Scope 3 emissions in your business can provide significant cost saving, differentiation and compliance benefits.

Effective management of Scope 3 emissions can lead to cost savings by optimizing resource use, improving energy efficiency, and reducing waste generation throughout the supply chain. Companies that proactively address emissions may also benefit from lower energy and transportation costs and increased operational efficiency.

Learn about how BAM Group, a leading supplier of civil engineering and construction, has reduced carbon emissions and costs.

As sustainability becomes increasingly important to consumers, investors, and regulatory bodies, companies that demonstrate a commitment to measuring and reducing Scope 3 emissions can gain a competitive edge in the marketplace. By differentiating as an environmentally responsible partner can attract customers, investors, as well as talent who prioritize sustainability.

Many jurisdictions are implementing regulations and reporting requirements related to greenhouse gas emissions, including Scope 3 emissions. By proactively measuring and managing Scope 3 emissions, companies can ensure compliance with current and future regulations, avoiding potential penalties and reputational damage.

Overall, the measurement and management of Scope 3 emissions have far-reaching implications for achieving our global reduction goals and limiting climate change. For members of the global business community, doing so also offers opportunities to reduce costs and create greater differentiation and competitiveness.

Learn how Achilles can help you to manage your GHG emissions with our highly effective Carbon Reduce programme.

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