April 10, 2022

Scope 3 Emissions: Contributing Factors, Measurement and Reduction

Scope 3 Emissions: Contributing Factors, Measurement and Reduction
Contents

Scope 3 emissions cover most of the carbon emissions in the value chain, resulting from emissions that happen outside of the reporting company's walls and are the scopes 1 and 2 of the other organizations in the value chain. If you want to know the scope 3 emission contributing factors, how to measure them, and how to reduce them, then this is for you.

What are scope 3 emissions?

Scope 3 emissions cover upstream and downstream indirect emissions throughout the value chain from the result of assets from a reporting company but not owned or controlled by them. The scope 3 emissions of a reporting organization are the scope 1 and 2 emissions of another organization. This includes the production of purchased products and the transportation of them, and the use of sold products.

value chain scope 3 emissions flow chart

Scope 3 emission examples

Scope 3 emissions are the largest proportion of emissions in the value chain and there are 15 categories of scope 3 emissions according to the Greenhouse Gas Protocol (GHGP). These can be anything from the value chain including procurement, business travel, waste, water, end of life treatment of sold products, franchises, investments, leased assets, use and processing of sold products, purchased goods and services, transportation of goods, capital goods, fuel and energy-related activities, and commuting. 

categories of scope 3 emissions

Difference between scope 1, 2, and 3 emissions

Greenhouse gas emissions have been categorized into 3 scopes by the GHG Protocol. It is the most internationally recognized guide for carbon accounting. Additionally, Net0 emissions management platform categorizes the data you provide so you don't need to worry about improper or inaccurate reporting. All investor-grade reports will itemize emission scopes compliant with the GHGP. 

scope 1 2 3 emissions chart

Why measure scope 3 emissions

  • Since scope 3 emissions are the largest percentage of GHG emissions, (about 70% for many businesses according to Deloitte), you will be getting ahead at preventing more significant effects of climate change.
  • It is a way to understand how to make more sustainable products regarding life cycles, going forward. Supply chains can understand the impact on the environment from their products and from the activities happening outside of their walls within the value chain.
  • Companies can discover gaps in their market to improve or add new products. In the beginning of new production the tCO2e could rise however, over time when a product's usage is emitting less and the entire value chain has a long-term reduction in emissions due to the new product's existence, then the overall result has been worth it.
  • Over half of GenZs and Millennials consider sustainability before making a purchase but don't have any data to prove the company isn't just greenwashing.
  • Investors seek sustainable businesses and are shying away from backing companies that do not comply with any of the UN SDGs especially in regards to carbon neutrality. In fact, 61% of investors won't invest in a company without a net zero plan.
  • Scope 1 and 2 emissions are required for reporting in many regions so scope 3 reporting is a benefit to making a company more competitive and gaining an eco-friendly rapport.

Net0 enables you to analyze your carbon footprint by vendors, scopes, units, and dates. Keeping record over time, you will see the benefits of measuring scope 3 emissions and the benefits on the environment when they are offset. In the example image below, you can see that the scope 3 emissions have the most weight from Nov 1 - 30, 2021. That is because of the amount of international cargo shipping that was responsible for carbon emissions in that month in this importing business example. 

carbon footprint analytics chart

Now see the same business example analysis below by units, which will show that the sources were mostly manufacturing and units (from the scope 3 emissions above). 

analytics chart of carbon footprint
Related content

Find out more about scope emissions reporting with one of our suggested resources:

• Article: What Are Scope 1, 2, and 3 Emissions?
• Article: Scope 4 Avoided Emissions: Everything You Need to Know
• Article: 10 Reasons Net0 Is the Best Carbon Accounting Platform

How to calculate scope 3 emissions

The first step of Net0's carbon accounting platform is using automation to capture raw data or entering it manually to convert it into carbon tonnage (tCO2e). Net0 was designed to completely streamline the emissions management process all in one dashboard. Using a calculator alone won't give you a clear and accurate view of the entire carbon footprint, won't issue you GHGP-compliant reports, and provide you verified offsetting projects for present, unavoidable emissions, to become carbon neutral certified. Calculating alone is great to see a rough estimation of what your company is emitting. However, using a full emissions management platform is the only way to get you to net zero until you eliminate carbon.

Greenhouse Gas Protocol Technical Guidance For Calculating Scope 3 Emissions

The GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (referred to as the Scope 3 Standard) is a companion guide to the scope 3 standard and is the most widely recognized internationally for GHG calculations throughout value chains. 

Net0 calculates all of the raw data provided by companies and automatically converts them to categorized scope 3 emissions data so outside accountants and consultancies aren't necessary. Since Net0 is a fully-loaded emissions management platform and not just a system of record, you can offset, make reduction plans with a simulation predictive technology tool, report emissions data of all 3 scopes, and get carbon neutral certified all in one place without seeking external tools and memorizing hundreds of pages of standards.

Scope 3 emissions reporting

The essentials of scope 3 emissions reporting can be found in our GHG Reporting article so you don't have to study the entire GHGP technical guide unless you are seeking more in depth knowledge. Our system is GHGP-compliant so all reports are investor-grade and done in real-time. You can also filter specific dates in the system as well to get reports for a desired timeframe.

investor-grade carbon neutrality report filter by date

When you generate your report, you will see all of your emissions itemized by scope and categorized in each of the 15 scope 3 categories.

How to reduce scope 3 emissions

Inventing products with lower CO2 emissions during manufacturing and more eco-friendly life cycles, transporting larger loads to distribution centers to cut back on logistics movements, getting involved with sustainable suppliers who are like-minded in their carbon neutral goals, depending on what you produce and how, reductions will look different in your market. Obviously there are the things any industry can manage to cut like waste and unnecessary energy usage.

You can also create new ways of working which reduce emissions like less business travel, smarter commuting, and getting others involved in your company and value chain in recording the data. Net0 allows you to onboard users so entering emissions data is a shared responsibility. It is more time and cost-efficient when everyone participates.

Use the simulator tool within the Net0 platform to plan reduction strategies in the future. View your entire carbon footprint through analytics with graphs and tables over time. When you see your emissions data you will realize your sources and where you can cut back. 

Plan realistic and ambitious reduction targets to get where you want to go by next year.

analytics of carbon target setting

How to tackle scope 3 emissions

  • Set targets to lower your emissions every year. They should be realistic yet push you to move forward. Net0 offers a publish dashboard and anyone you give the link to will be able to see where you are in your net zero journey. Being transparent about your progress and communicating your milestones to stakeholders will keep you accountable along the way.
  • Offset the unavoidable emissions. Net0 provides 140+ verified climate programs across the globe that you can contribute to in your climate action portfolio. These projects accelerate the creation of life-changing projects that enable us to switch to alternatives for instance. You know where your offsets are taking place and that they are actually getting done.
  • Get emissions management software. You cannot get on a net zero journey without having the proper tools. Since Net0 enables you to calculate, reduce, track, offset, report, and certify all in one place, you will not need external tools. Consultancies can cost up to five times the rate of carbon accounting software. You also get full control of your emissions platform. With the data you provide, you can track your carbon footprint, view your progress in real-time, and run reports for stakeholders at any moment by just logging into your personal dashboard and performing the tasks.

Scope 3 emissions double counting

According to the Gold Standard on double counting:

"Double Counting: The scenario wherein the benefit of a single GHG Emission Reduction (ER) unit is used on more than one occasion to:

• Sell to third parties for the purpose of financial gain, VER offsetting or to achieve regulated targets AND/OR

• Be included in an account or inventory to avoid the requirement to purchase ER units under a regulated system"

Since carbon accounting software reports on raw data emissions accurately and all offsetting projects are verified without having to go outside to purchase carbon credits or enter trading markets, it is becoming more difficult for companies to perform double counting. Now there are emissions management platforms that report in compliance with the GHGP, so having records of the actual tCO2e along with offsets is valuable for honesty and transparency.

To conclude

Scope 3 emissions can be managed more thoroughly with proper communication and data insights throughout the value chain. Scope 1 and 2 reporting that is done accurately by others in the value chain will also further you along on your net zero journey so all scope 3s do not fall on the same reporting company.

Book a demo with Net0 today and learn how converting your raw emissions data to precise calculations and tracking, reducing, offsetting, and reporting will get you carbon neutral certified faster and easier.

Cover photo by Johannes Plenio from Pexels

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FAQ

What’s the difference between gross zero and net zero?

Again, net zero is coming to a balance between emissions and those which have been removed from the atmosphere. Gross zero means stopping all emissions, period.

Again, net zero is coming to a balance between emissions and those which have been removed from the atmosphere. Gross zero means stopping all emissions, period.
How soon can we start?

You can usually start using the system within a week of contract signature. Book a call with us to start.

You can usually start using the system within a week of contract signature. Book a call with us to start.
Do you help with setting up the processes?

Yes, our team will help you set up the platform and provide you with guidance on how to use it.

Yes, our team will help you set up the platform and provide you with guidance on how to use it.
What type of clients have you successfully helped?

We work with companies from different industries, from professional services and tech businesses to construction companies and manufacturing sites.

We work with companies from different industries, from professional services and tech businesses to construction companies and manufacturing sites.
What sets Net0 apart from others on the market?

Net0 offers simplicity, automation, no-code integrations, and provides an activity-based approach meaning the calculations are done by co2e tonnage and not by how much money was spent on the activity that led to emissions.

Net0 offers simplicity, automation, no-code integrations, and provides an activity-based approach meaning the calculations are done by co2e tonnage and not by how much money was spent on the activity that led to emissions.
Why do companies choose to work with Net0?

Net0 is the most comprehensive solution to recording, measuring, tracking, offsetting, and certifying emissions all in one place and in minutes. Net0 also enables organizations to invite anyone they want to contribute to the dashboard, being all-inclusive and simple to use.

Net0 is the most comprehensive solution to recording, measuring, tracking, offsetting, and certifying emissions all in one place and in minutes. Net0 also enables organizations to invite anyone they want to contribute to the dashboard, being all-inclusive and simple to use.

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