Scope 3 emissions account for the lion’s share of a company’s total carbon footprint on average. Understanding scope 3 emissions is crucial to measure climate-related risks and opportunities as well as set effective carbon reduction strategies to achieve decarbonisation goals.
Since Scope 3 emissions are indirect, understanding the boundaries for businesses and measuring scope 3 emissions is complex and often creates confusion. At the same time, Scope 3 emissions account for approximately 70% of many business' carbon footprints. Thus, it is important to ensure that businesses do not fall for myths about value chain emissions.
In this article, we are looking into misconceptions about value chain emissions and debunking 10 myths about scope 3 emissions to help businesses transition to net zero smoothly.
The GHG Protocol defines the three scopes of emissions as a way of categorizing different types of emissions a company creates in its own operations, as well as in its wider value chain. Scope 3 specifically accounts for emissions outside of a company's own walls - from the goods it purchases to the disposal of the products it sells.
Measuring and reporting only scope 1 and 2 emissions leaves many businesses with over 80% of their emissions unrecorded. Therefore, without including scope 3 emissions, businesses can only get a partially true, if not totally misleading, assessment of their entire carbon footprint and are enabled to fully evaluate the climate-related risks and opportunities throughout the value chain.
Not measuring scope 3 emissions also leads to challenges when comparing the sustainability impact of different manufacturers within the same industry without looking at their supply chains. For example, it is infeasible to distinguish an electric vehicle manufacturer from a traditional car manufacturer or to understand the full scale of transition risks.
Businesses often use the division of emissions into scopes as an excuse and a justification for not taking responsibility for indirect emissions. Scope 3 falls outside of the company’s direct ownership and control. Since it is more challenging to collect, verify and organize scope 3 data, businesses choose to focus only on direct emissions. Reporting scope 3 emissions is also optional in many industries and therefore corporate value chain emissions appear to matter less at the moment although hindrances do not devalue their importance.
In fact, sectors that are still dominated by scope 1 and 2 emissions represent the minor part of the economy; meaning that majority of sectors are indeed dominated by scope 3 emissions and for them indirect emissions just as much, if not more, as direct emissions.
Businesses believe that measuring scope 3 emissions is difficult because others in the value chain will not offer up information. It's getting easier to compile data with technology. Carbon accounting agencies and consultancies used to be very expensive so companies didn't favor counting for scope 3s.
Now we know that this is a myth because businesses can utilize emissions management software to count scope 3 emissions like they can with scopes 1 and 2 emissions.
With carbon management software, collecting raw data by automation and converting it to greenhouse gas emissions tonnage (tCO2e) is easy to do. What was difficult, time-consuming, and expensive years ago is now done in seconds. Upload your bills and invoices and Net0 will parse out the data or enter it manually if you choose. You can even connect systems with out-of-the-box integrations to improve your workflow and automatically collect and convert third-party data.
The Gold Standard reports, if two companies request a supplier reports to the CDP, there's a 68% chance they'll respond and if three request it, it rises to a 76% chance. Of course the value chain spans beyond only suppliers and the more you find like-minded organizations who are transparent, the better chance that you will get the data, or that they are reporting their scope 1 and 2s so your scope 3s in that department would be covered and you can avoid double counting.
This is a myth because now that transparency is an important part of staying competitive in your market and ESG criteria is required by many investors, the statistics show that value chains that operate well in the green economy provide the data.
Net0 enables colleagues across the supply chain to contribute to entering data so that any scope can be accounted for and the platform itemizes and categorizes each of the upstream and downstream emissions on the report automatically.
Reporting any emissions data should not be postponed because it will do more damage to the atmosphere not knowing your carbon footprint and will give your company a bad rapport. The data is available by collecting your companies' bills and invoices and anything else that would give you the information. Any amount of data that you have now is better than reporting no data at all. This is a myth because the longer you wait to report data, the harder it will be to create a net zero strategy.
When you enter raw data into Net0's carbon accounting platform, it automatically converts data to tCO2e, calculates, measures, tracks, and analyzes emissions in real-time. It's a fully-loaded emissions platform and when you offset emissions you receive certificates and badges of carbon neutrality that are hosted by our site. Moreover, use the simulation tool and the analyses to plan your carbon reductions.
If you would like to know more about how to report your emissions, please read the suggested content from our free library:
• Article: What Is Carbon Accounting?
• Article: What Are Scope 1, 2, and 3 Emissions?
Apple and Samsung are examples of competitors that do not have the same scope 3 emissions.
Apple has reached carbon-neutrality. Because of materials they choose to manufacture with, how products are shipped, how products are used (for example chargers for iPhones), and ending the life cycle of the iPhone with Daisy and Dave, "the robots it specifically designed to disassemble iPhones into their component parts."
Samsung on the other hand is making efforts to become more eco-friendly by 2025 with improved packaging free of plastic, manufacturing with more recycled materials, reducing standby power consumption of phone chargers, and moving towards zero waste going to landfills. They have an unknown carbon neutrality date.
Therefore, this is a myth because they have different strategies across their supply chain which cause different amounts of emissions, including scope 3s.
Technology is the measurable guide to driving a carbon reduction strategy. It scales strategies with benchmark setting and target setting. Without technology you would be spending 5x as much money and far more time on carbon consulting agencies that have to find partners to make offsets with. You would have them making carbon reduction strategies for you, you wouldn't have real-time access to your data, and setting benchmarks and making targets would take far longer and couldn't be done immediately like they can in Net0's system.
Making benchmarks and setting targets in Net0's carbon management platform is the best way to follow through with your emissions strategies and produce measurable results.
Double accounting is when two entities claim the same carbon removal or reduction credit. Double accounting can occur if multiple sources amongst the same supply chain count for the same emissions. This occurs because of the enmeshing of different products in the supply chain. For instance, the scope 1 emissions of an upstream entity would be the scope 3 of the reporting company. Basically, two companies, especially in other countries, should not take credit for the same climate action.
The occurrence of this problem is rare because with an emissions management platform like Net0, companies don't have to deal directly with voluntary trading programs because they can do offsets automatically with any of the verified projects in the platform. When the emissions vs. offsets are reported, they are itemized on GHGP-complaint reports, making it easy to keep track of the scope 3 emissions that have been accounted for and offset.
Communicating your net zero efforts is important to stakeholders from investors that require ESG criteria and eco-conscious consumers that reject polluting brands. Since the economy is going green, it will hurt your business in the long-term to not transition with it. It will hold you back.
Many investors won't even consider businesses without transparent measurements of carbon emissions or without any SDGs being pursued. In fact, impact investing is on a 25.9% rise in the last 3 years to a measured $636 billion. End-users of your product or service will become loyal to the companies that are going carbon neutral. Greenprint reports that 78% of Americans polled reported they preferred to buy environmentally friendly products if they have the option, but 20% don't even trust that the reporting company is eco-conscious. Eco-friendly and especially carbon-neutral companies have something value-added that is becoming a must-have.
This is why Net0 offers a public dashboard for anyone the reporting company gives the link to. Then stakeholders can see the progress you have made in your net zero journey and the companies have the proof available to back up what they claim.
Everyone is going carbon neutral. Since transparency with sufficient data to support claims of carbon neutrality is demanded amongst stakeholders, the more raw data you provide, the better. However, your reduction actions need to match your reduction plans in the long-term. When conscious consumers look at the steps you have taken and celebrate milestones you have achieved in your net zero journey, the progress will not be overlooked. Moreover, when you record all of your emissions, you view your carbon footprint in such a way that you can evaluate risks vs. opportunities and the data provided gets translated into analyses in Net0's platform, showing you where you can and should reduce emissions and start making some decisions. These decisions might lie in choosing new vendors, retrofitting buildings or replacing machinery to be more eco-friendly, substituting raw materials involved in production or the way in which something is produced, improving the end users' product emissions or life cycle of a product, adopting the circular supply chain, and much more. You will see the contributors as you progress in your net zero journey and with an agile strategy, you can improve your business and your reductions one step at a time in a way that is good for the environment yet still profitable as we transition into the green economy.
Now that you have seen the value in reporting your scope 3 emissions and have cleared up some of the myths, it should be easier for you to make decisions about building your net zero strategy and moving forward with it. The benefits are that you will be doing your best for the environment, for gaining and keeping loyal and socially responsible customers, and for maintaining an impressive portfolio for ESG criteria to present to investors.
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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.
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