What is scope 3 and why should I care?

When we talk about Greenhouse Gas emissions (GHG), there’s no one size fits all. That’s why you generally see them broken down into three categories, scope 1, 2, and 3. The term scope denotes the source of the GHG emissions or removals associated with an organisation’s activities, with scope 3 being one piece of the puzzle. 

But let’s start by looking at what scope 3 isn’t. 

The first cab off the rank, scope 1 describes the direct emissions generated or removed by an organisation’s operations. These are the emissions the organisation has direct control over, such as the amount of fuel they use to power their fleet, the natural gas used for building heating or hot water, the fertiliser application to land, or fugitive emissions from refrigerant and HVAC systems. 

Scope 2 addresses the indirect emissions from imported energy. This accounts for the amount of electricity purchased from the grid (as well as some steam processes). It accounts for GHG emissions that the organisation does not have direct control over but ultimately creates. 

Scope 1 and 2 accounting and efficiencies have historically been relatively easy to calculate and strategies to implement lower emission options have been used to phase out or reduce scope 1 and 2 sources. 

Scope 3 emissions however, are the more slippery of the three. 

They again address indirect emissions, but this time it gets a bit trickier. If you think about the way an organisation operates, measuring the fleet fuel consumption and electricity use are only one part of the story. There are still many other places indirect emissions can occur as a result of value chain effects. Your value chain covers upstream and downstream organisational activities, and could create emissions from business travel, staff commute, freight transport, material production, and waste.

Good or bad, everything we do has an impact, and scope 3 plays a crucial role in understanding the bigger picture of an organisation's emissions footprint. 

Scope 3 is broken down into 15 categories in order to gain a comprehensive understanding of where emissions stem from. As the saying goes, “you can't improve what you don't measure”. Analysing your scope 3 emissions should be seen as a highly valuable exercise, giving your organisation a greater understanding of risk management, cost reduction opportunities, and reputational benefits. 

The more that climate disclosures become common place, the more that value chain is important. Just as a group assignment requires the work of all team members to get the grade, others organisations contribute to your scope 3 emissions just as you might to theirs. If you find there are some team members letting your grade down, you might question working with them again. It goes the same for those contributing to your value chain. If there are others who might give you a better grade, then wouldn’t you choose to work with them instead? 

Scope 3 emissions arguably create the most insight and opportunity for your organisation when it comes to exploring climate related risk. These emissions allow you to take a deeper dive into your value chain and identify opportunities for refinement and growth. Not only will the planet thank you for it, but your operational performance will too. 

Millie Taylor for Sustainability Marketing Group